Total fails in bid for UTS Energy
posted on
Apr 28, 2009 06:36AM
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
Breaking News from The Globe and Mail
GREG KELLER
Tuesday, April 28, 2009
PARIS — French oil giant Total SA said Tuesday that its cash offer for UTS Energy Corp. had failed as too few shareholders in the Calgary oil sands company took up the offer.
Total said that as of the deadline Monday evening, it had not reached a threshold of two-thirds acceptance of its offer from UTS Energy investors and the offer was “terminated.”
In a statement, the French company said it has given instructions for all shares that had been tendered in the offer to be “promptly returned” to the shareholders.
Earlier this month Total raised its bid for UTS Energy Corp. by about 35 per cent, but UTS and two of its major shareholders said the offer is still too low.
Total had raised its offer to $829.8 million from its original January bid of about $616 million.
In its statement, Total said it “believed that our offer represented certainty and fair value for UTS shareholders.” The company said it “remains committed to its current activities and investments in Canada” and will “continue to implement its willing strategy in the oil sands.”
Last week, UTS Energy's board of directors had recommended shareholders reject the takeover offer, saying it was “inadequate and not in the best interest of UTS.”
UTS's main asset is its 20 per cent stake in the Fort Hills oil sands project near Fort McMurray, Alberta. Petro-Canada is the operator with a 60 per cent interest, and Vancouver-based miner Teck Cominco holds the remaining 20 per cent.
That project was put on hold last fall, when oil prices crashed and credit became increasingly difficult to come by. The oil sands field has an estimated 4 billion barrels of bitumen, a tar-like substance that is extracted using mining techniques.
Alberta's once-booming oil sands sector has cooled as every major company has scrapped or delayed some expansion plans as the price of oil has dropped from almost $150 to around $50.
Paris-based Total has been seeking to increase its position in the oil sands.
Alberta is home to vast reserves of oil sands. Industry officials estimate the region could yield as much as 175 billion barrels of oil, which would make Canada second only to Saudi Arabia in crude oil reserves.
However, the cost of getting the oil out of the sand is prohibitive. Analysts say oil needs to be at $80 for new oil sands projects to be viable.
The massive oil sands projects have also been criticized as a growing source of greenhouse gas emissions.
© The Globe and Mail