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Latest Headlines
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Mar 27, 2009 3:49:00 PM MST
UTS reiterates rejection of Total bid on `positive developments'' (UTS-Total)
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CALGARY _ UTS Energy Corp. (TSX:UTS) says a number of positive developments, including this week´s announced merger of Suncor Energy Inc. (TSX:SU) and UTS´s oilsands partner Petro-Canada (TSX:PCA), are reinforcing the Calgary company´s decision to reject a $616 million acquisition bid by France´s Total.
UTS said late Friday the proposed deal between Suncor and Petro-Canada, which operates the Fort Hills oilsands project along with UTS and Teck Cominco Ltd. (TSX:TCK.B), could enhance the value of the project and the company.
"The proposed Suncor/Petro-Canada merger will mean the commitment of a new, more experienced and much larger operator, which should considerably enhance the value of Fort Hills and UTS," said president and chief utive William Roach.
Roach added that the merger could also allow the companies to modify the scope and cut capital costs at Fort Hills through integration with Suncor´s existing operations.
"Reducing capital intensity of Fort Hills lowers the economic threshold oil price needed to advance the project, improves economics for UTS and significantly reduces or potentially eliminates UTS´s remaining financing requirements," the company stated.
UTS added that higher forward oil prices, a significant new oilsands discovery and a general improvement in market sentiment have also improved "key items weighing on our share price prior to Total´s bid."
The Fort Hills partners announced last year that the project´s cost had swelled 45 per cent over its previous estimate, and that a decision on going ahead with the mining would be delayed.
France´s Total has been aggressively trying to take over UTS, which faces financing issues, but its overtures have so far been spurned.
Total has offered $1.30 a share for UTS, which has a 20 per cent working interest in Fort Hills.
With 474 million UTS shares outstanding on the stock market, the Total bid values the Calgary company at about $616 million. However, investors have traded the stock above the offer price, indicating they expect a sweeter offer from Total.
The offer was originally supposed to expire Monday, but Total E&P Canada Ltd., the French company´s Canadian unit, said late Friday is has extended the deadline to April 16.
UTS shares were down five cents to $1.70 in Friday trading on the Toronto Stock Exchange.
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