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OIL AND GAS
Statoil sole winner in offshore Canadian auction
by Daniel J. Graeber
Halifax, Nova Scotia (UPI) Nov 13, 2015


Canadian Oil Sands-Suncor spat takes new turn
Calgary, Alberta (UPI) Nov 13, 2015 - Canadian Oil Sands Ltd. continued to urge its shareholders to reject a bid from rival Suncor Energy, saying the offer would sell itself if it was worthwhile.

Suncor last month said its unsolicited $3.2 billion takeover bid for its rival was a "financially compelling" offer. Last week, Suncor called on the Alberta Securities Commission to consider a shareholder rights plan adopted by Canadian Oil Sands, which is designed to prevent the takeover.

Suncor, in a letter to rival shareholders, said a "do-nothing" stance from Canadian Oil Sands is a risky position given the continued weakness in the energy sector. In a new filing, Suncor said it updated information on the bid to reflect further evidence of the downturn in third quarter financial results.

Suncor is a minority stakeholder in the Syncrude oil venture in Alberta. Canadian Oil Sands holds a 37 percent stake in the project. Suncor's letter warned rival shareholders of the "risks they face if they reject the offer, given the new business reality for oil prices and [the company's] total reliance on the performance of the Syncrude oil sands facility, a single asset over which Canadian Oil Sands has little control."

Donald Lowry, board chairman at Canadian Oil Sands, said the latest move by Suncor represents a scare tactic meant to play on shareholder emotions.

"While Suncor uses fear and intimidation to pressure our shareholders, [the board] is working for shareholders by giving them more time through the shareholder rights plan and conducting a thorough evaluation of alternatives to surface better value," he said in a statement. "Those higher-value alternatives range from a superior offer to remaining an independent company."

Canadian Oil sands said that, if it represented a good value, the unsolicited bid "would sell itself."

Only two of the nine parcels on the auction block for energy explorers were doled out for eastern Canadian offshore acreage, a regional body said.

A subsidiary of Norwegian energy company Statoil was the successful bidder on two of the nine parcels up for grabs, offering $61.7 million. Parcels three through nine received no offers.

Nova Scotia's government estimates there may be up to 120 trillion cubic feet of natural gas and 8 billion barrels of oil offshore. All of the parcels up for grabs are located near licenses held by major energy companies like Shell and BP.

Start Pinks, chief executive officer of the governing Canada-Nova Scotia Offshore Petroleum Board, said winning the license doesn't necessarily equate to authorization for offshore operations.

"The CNSOPB will require a project-specific environmental assessment to be conducted for any proposed offshore work, and must be satisfied that it is unlikely to cause significant adverse environmental effects before issuing any authorization," he said in an emailed statement.

Each bidder must also demonstrate their have experience in deepwater basins like those off the eastern Canadian coast. Last year, British energy services company Petrofac secured a contract to examine the prospects of oil trapped in the deep waters off the eastern Canadian coast. Petrofac said the region is geologically similar to oil basins off the northwest coast of Africa, though reserves offshore Nova Scotia are thought to lie nearly 2 miles below the sea bed in mile-deep waters.

Tim Dodson, Statoil's exploration director, said the successful bid contributed to a growing portfolio of frontier territory by "securing access at scale" offshore Canada.

Statoil already holds licenses in the region, boasting of oil and gas discoveries in 2009 and again in 2013. In October, the CNSOPB gave Dutch supermajor Shell consent to start an exploratory drilling program in the region's deep waters.


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