IronCity

Barrick Gold's Move Into Oil: Precursor to Commodities Consolidation?

"Barrick Gold Corp.'s (ABX) C$354-million bid for Cadence Energy Ltd. (CDSFF.PK) has a "minimal" financial impact on the gold giant, according to Blackmont Capital analyst Richard Gray. He wrote that the total value of the offer represents just 0.8% of Barrick's market cap, and that Cadence's estimated cash flow for 2009 would augment Barrick's by just 2%.

However, he still sees the logic in Barrick's takeover proposal.

In a note to clients, he wrote:

The significance of the world's largest gold company acquiring an oil/gas producer underscores the impact of the rising energy prices for miners and is a manoeuvre that we believe will become more common.

Mr. Gray maintained a "buy" rating on Barrick and a target of C$54.00 a share."

From: seekingalpha.com/artic...

At 345 M they will pay near $19.50 per barrel. Is this a fair price?

Barrick Gold's Move Into Oil: Precursor to Commodities Consolidation?

Very interesting article, very understandable and clear lenguage. To evaluate Barrick's move would be interesting to know how much they will pay for the estimated 18.2 million barrels of oil under ground and how realistic the estimation is. Thanks.