Suncor acquires Petro-Canada

by TDH | March 23, 2009 at 08:01 am

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Suncor Energy Inc., a leader in oilsands resource development has announced its acquisition of Petro-Canada. The two have agreed to merge and continue to operate corporately under the Suncor name, while continuing to use the Petro-Canada name at the pumps.

"This merger creates a made-in-Canada energy leader with the assets, cost structure and financial strength to compete globally," said Rick George, who is president and chief executive officer of Suncor and who will assume the same role with the merged entity. "The combined portfolio boasts the largest oil sands resource position, a strong Canadian downstream brand, solid conventional exploration and production assets, and low-cost production from Canada's east coast and internationally."

Holders of Petro-Canada shares will receive 1.28 shares of the new company for every Petro-Canada share they hold, while existing Suncor shareholders stocks' will retain there initial value totaling 60 per cent of the new entity.

The deal, set to close in the third quarter of 2009, will give the new company an estimated $43.3 billion market value and a commanding position in Alberta's lucrative oilsands. Both companies, though, had previously announced delays to increased oilsands development due to waning crude prices.

Analysts say a fully integrated oilsands project, in which the oil is both extracted and processed, need oil prices of anywhere from $75 US to $100 per barrel to be economically viable. Crude prices nudged over the $50 mark last week, but have been much lower in recent months.

The merger combines Suncor's oilsands command with Petro-Canada's strong "downstream brand" and will allow drastic cost cutting measures with the elimination of redundant spending.

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