France's Total buys Synenco
April 29, 2008
$480M deal for Calgary-based firm brings greater oilsands holdings: French oil major Total said Monday it will buy Synenco Energy Inc. for about $480 million in a deal that will boost Total's holdings in Canada's oilsands region and end Synenco's year-long search for a buyer. Total will offer $9 for each Synenco share, which represents a premium of around 15.5 per cent to Synenco's closing price on Friday of $7.79.
Total added that the offer -- a little more than half the $17.50 a share Calgary-based Synenco received when it went public in 2005 -- had been unanimously approved by Synenco's board of directors.
Synenco's main asset is a 60-per-cent stake in the 1.66-billion-barrel Northern Lights oilsands project. The remaining stake is held by Chinese refiner Sinopec. Synenco said it also has about $230 million in cash on hand. Oilsands production is expected to nearly triple to three million barrels a day by 2015 as companies act on plans to invest more than $100 billion on projects to exploit the resource.
Synenco put itself up for sale a year ago, when the Northern Lights construction budget swelled to $10.7 billion, nearly double its initial estimate, and it halted plans to build an upgrader east of Edmonton to convert the tar-like bitumen into refinery-ready synthetic crude.
The company focused its operation on a planned 113,400-barrels-per-day oilsands mine, but last month chopped 70 per cent of its staff. "I think (Synenco's) board of directors is probably pretty happy to have a deal," said William Lacey, an analyst with FirstEnergy Capital. Northern Lights "was a marginal project to begin with that's a long way from infrastructure and it's just not that big." For Total, Synenco offers additional reserves in the oilsands. Michael Borrell, head of Total's Canadian unit, said the bitumen from Northern Lights could eventually feed the upgrader the company is building for its 74-per-cent-owned Joslyn oilsands mining project.
The Northern Lights project "is an interesting asset that we think fits well with us as an organization and we'll look to integrate that into (Total Canada's) overall plans," he said. Total's upgrader will produce 150,000 barrels a day of synthetic crude when completed in 2015. Further phases will boost output to nearly 300,000 bpd. Federal Environment Minister John Baird announced Monday that the 100,000-barrels-per- day mining portion of the Joslyn project will face a public environmental review staged by the Canadian Environmental Assessment Agency and Alberta's Energy Resources Conservation Board.
Total shares rose 0.43 per cent to 52.715 euros in Paris. Synenco stock rose $1.18, or 15
per cent, to close at $8.97 on the Toronto Stock Exchange.
The Edmonton Journal 2008
Synenco's main asset is a 60-per-cent stake in the 1.66-billion-barrel Northern Lights oilsands project. The remaining stake is held by Chinese refiner Sinopec. Synenco said it also has about $230 million in cash on hand. Oilsands production is expected to nearly triple to three million barrels a day by 2015 as companies act on plans to invest more than $100 billion on projects to exploit the resource. Synenco put itself up for sale a year ago, when the Northern Lights construction budget swelled to $10.7 billion, nearly double its initial estimate, and it halted plans to build an upgrader east of Edmonton to convert the tar-like bitumen into refinery-ready synthetic crude.
The company focused its operation on a planned 113,400-barrels-per-day oilsands mine, but last month chopped 70 per cent of its staff. "I think (Synenco's) board of directors is probably pretty happy to have a deal," said William Lacey, an analyst with FirstEnergy Capital. Northern Lights "was a marginal project to begin with that's a long way from infrastructure and it's just not that big." For Total, Synenco offers additional reserves in the oilsands. Michael Borrell, head of Total's Canadian unit, said the bitumen from Northern Lights could eventually feed the upgrader the company is building for its 74-per-cent-owned Joslyn oilsands mining project.
The Northern Lights project "is an interesting asset that we think fits well with us as an organization and we'll look to integrate that into (Total Canada's) overall plans," he said. Total's upgrader will produce 150,000 barrels a day of synthetic crude when completed in 2015. Further phases will boost output to nearly 300,000 bpd. Federal Environment Minister John Baird announced Monday that the 100,000-barrels-per- day mining portion of the Joslyn project will face a public environmental review staged by the Canadian Environmental Assessment Agency and Alberta's Energy Resources Conservation Board.
Total shares rose 0.43 per cent to 52.715 euros in Paris. Synenco stock rose $1.18, or 15
per cent, to close at $8.97 on the Toronto Stock Exchange.
The Edmonton Journal 2008