Don't sell to Total, UTS Energy says
posted on
Feb 09, 2009 05:23AM
Connacher is a growing exploration, development and production company with a focus on producing bitumen and expanding its in-situ oil sands projects located near Fort McMurray, Alberta
The Canadian Press
Monday, February 09, 2009
CALGARY — — UTS Energy Corp. says its board has unanimously urged shareholders to reject Total E&P Canada Ltd.'s unsolicited $617-million offer to acquire the Calgary oil sands operator.
The UTS board said Monday the bid is inadequate and recommended shareholders reject the Total offer.
“This is an inadequate and opportunistic offer that fails to recognize the full value of UTS,” said Dennis Sharp, chairman of the board. “We can do better for our shareholders than what this offer represents.”
UTS has created a special board committee to pursue various initiatives to maximize shareholder value.
Late last month, Total offered $1.30 a share for UTS, which has a 20 per cent working interest in the Fort Hills oil sands project in northern Alberta, which it operates jointly with Teck Cominco Ltd. and Petro-Canada.
In outlining its rejection of the Total bid, UTS said:
- The sum of UTS's cash and investment in all its projects, including Frontier and Equinox, and remaining Fort Hills project earn-in is $3.57 a share, far above the Total offer.
- The Total offer does not reflect the value of UTS's world class oil sands assets and growth prospects;
- The bid does not include any value for the significant efficiencies available to Total in acquiring UTS.
Total's Canadian subsidiary has a 74-per-cent stake in the Joslyn project in the area, and a 60 per cent stake in the Northern Lights project. The French company also holds a 50 per cent interest in the Surmont lease, located about 60 kilometres southeast of Fort McMurray.
- The timing of the Total offer is opportunistic given the recent dramatic decline in the price of oil and in the price of UTS shares;
- Major institutional shareholders have termed the Total offer as inadequate; “UTS has built considerable shareholder value through the prudent development of our oil sands assets, while at the same time, establishing the platform for significant future growth,” president and CEO William Roach said in a statement.
“Over the past five years, UTS has grown from a single project company with a $50 million market capitalization to become a well-financed exploration and development company with three projects, major partners and a significant exploration portfolio.”
Last week, UTS Energy said it has significantly increased its contingent bitumen resources with the addition of the Frontier oil sands project, for a total best estimate of 1.7 billion barrels.
UTS said Thursday its three-year exploration program has discovered two additional oil sands mining projects: Frontier and the Equinox project. In both projects, UTS holds a 50 per cent working interest and Teck Cominco Ltd. holds the other half.
In early trading Monday, UTS shares rose two cents to $1.72.
© Canadian Press