Exxon Mobil: Further into Oil Sands

Includes: IMO, SU, XOM
by: Streetwise Blog

By Andrew Willis

Ownership of Alberta’s oil sands continues to consolidate in the hands of global energy companies, with Exxon Mobil Corp. (NYSE:XOM) paying $250 million to take over leases owned by UTS Energy.

Exxon, and subsidiary Imperial Oil (IMO), are picking up properties in the northeastern corner of Alberta in a region known as Firebag River; Suncor (NYSE:SU) is also active in this area.

UTS Energy first acquired property in the area in 2006, and subsequently added to the position. The decision to sell was made part of a larger strategic review of the company’s position that concluded with this sale. RBC Dominion Securities and TD Securities acted as financial advisers to UTS on the transaction, along with law firm Blake Cassels & Graydon.

UTS Energy is focused on developing the Fort Hills oil sands region with Teck and Suncor. The $200 million after-tax proceeds of Monday’s sale will help fund this development. In a report Monday on UTS Energy, BMO Nesbitt Burns analyst Randy Ollenberger said the Firebag River sale, “leaves the company extremely well positioned to respond to the needs of both the Fort Hills project and its portfolio of other development opportunities.”

Last year, UTS Energy was the target of an unsuccessful hostile takeover bid from France’s Total.

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