Total SA Interested in Teck Cominco's Fort Hills Stake?

Shares of UTS Energy Corp. (UEYCF.PK) are trading well above the C$1.30 per share offer price from Total SA (TOT), which implies that investors expect a higher bid will emerge.

The obvious company to look to is Petro-Canada (PCZ), which is a partner in the stalled Fort Hills oil sands project with both UTS and Teck Cominco Ltd. (TCK) However, Petro-Canada said it would welcome Total as a partner, saying this would only be beneficial for the project.

Nonetheless, the low valuation of the French oil giant’s bid has analysts anticipating plenty of interest in a UTS auction.

In addition to its financial capacity, Total could bring its expertise in heavy oil, refining and marketing, according to Canaccord Adams analyst Terry Peters. He also wouldn’t be surprised if Total was interested in buying Teck Cominco’s 20% share of Fort Hills.

Mr. Peters said in a note to clients:

Ultimately, with its other oil sands assets, the potential exists for significant strategic alignment of both Total’s and Petro-Canada’s assets in the oil sands business.

He also feels that Total’s bid for UTS highlights some hidden value in Petro-Canada for its 60% stake in Fort Hills.

Canaccord continues to rate the stock a “buy” with a C$38 price target.

Comments

[PeteK:]

You need to talk more details.
It's hard to understand what it's all about.
Just a few lines don't mean much to readers.

Feb 05 04:27 AM

[Vox Rationalis:]

The heading doesn't fit the text in the least.

Feb 06 04:27 PM