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The Times: Shell pays £1.1bn for Canada sands firm

The Times May 09, 2006

Shell pays £1.1bn for Canada sands firm

By Carl Mortished

SHELL Canada is digging deeper into Canada’s oil sands. It has agreed to buy BlackRock Ventures for C$2.4 billion (£1.1 billion) — the second investment in two months by Shell in Alberta’s bitumen deposits.

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The quoted Canadian subsidiary of the Dutch multinational has secured the agreement of BlackRock’s management to an offer of C$24 per share. The bid represents a 27 per cent premium on the closing price of BlackRock shares last week, but the stock has soared amid the frenzied activity by energy investors in Alberta’s muskeg wilderness.

Oil companies are flocking to the Canadian province, enticed by the huge resource, reckoned by some to be as large as Saudi Arabia.

Oil or tar sands were once dismissed as too expensive an alternative to conventional crude oil, but the high oil price has removed the major hurdle to investment, turning Fort McMurray in northern Alberta into a boom town.

“This acquisition is consistent with our growth plan,” Clive Mather, Shell Canada’s president, said. He said that it would add 12,000 to 14,000 barrrels per day to Shell’s existing output.

BlackRock shares have risen 64 per cent this year amid takeover speculation. At the bid price, Shell is paying about $11 per barrel for the company’s 209 million barrels of proven and probable reserves.


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