Royal Dutch Shell Plc  .com Rotating Header Image Royal Dutch Shell seen maintaining status quo on Shell Canada assets, plans (Shell-Canada)

Apr 2, 2007 3:02:00 PM MST
CALGARY (CP) _ Royal Dutch Shell remained discreet on the future of Shell Canada projects after announcing Monday its success in acquiring 99 per cent of the Canadian subsidiary‘s shares.

However, few analysts foresee any shifts in direction, as Royal Dutch Shell had already been majority owner of Shell Canada‘s oil and natural gas assets, refineries in Alberta and Ontario and more than 1,600 gasoline stations.

“They‘ve been running it as if it were their company with a minority tag-along,‘‘ said Tom Ebbern, an analyst with Tristone Capital Inc.

“It‘s hard to believe they were approving projects to build if they didn‘t believe those were the best to spend money on.‘‘

Shell Canada, one of the major integrated oil companies in the country, has the controlling interest in the Athabasca Oil Sands Project, which is undergoing an $11.2-billion expansion.

It also is a partner in the proposed Mackenzie gas pipeline project, expected to cost more than $16 billion.

Royal Dutch Shell owned 78 per cent of Shell Canada prior to its buyout bid launched late last year. Shareholders accepted after the international energy giant sweetened the pot to $45 per share in January, up from $40.

There are no compelling reasons to get rid of assets such as its natural gas plays in Western Canada just when they‘re becoming more productive and commodity prices are on the uptick, said analyst Randy Ollenberger of BMO Capital Markets.

“They bought the assets to develop them, so I don‘t think there are any reasons to believe they are going to stop spending money in Canada or to reduce staff levels,‘‘ he said.

Shell Canada will be delisted from the Toronto Stock Exchange by the end of May, becoming a wholly owned subsidiary of Royal Dutch.

It employs 4,800 people across Canada, but head office doesn‘t anticipate any major cuts, spokeswoman Janet Rowley said.

Senior management, including president and CEO Clive Mather, will remain at least until the beginning of June, but the new management structure hasn‘t been clarified, she said.

“We‘re not anticipating any layoffs; this is not a downsizing exercise,‘‘ Rowley said. “But it‘s too early to say what changes could come with the integration.‘‘

Shell Canada left the conventional oil business in Canada years ago but has been a pioneer in offshore energy exploration and helped develop the Sable Island natural gas project off the coast of Nova Scotia.

But its future lies in the Alberta oilsands, where it operates and owns 60 per cent of the Athabasca venture.

“Unconventional growth needs scale and integration and this deal allows Royal Dutch Shell to fully combine growth plans in Canada with the international portfolios,‘‘ spokeswoman Alexandra Wright said from England.

“And this fits with our drive to simplify the structure of the company and leverage research and development scale and integration.‘‘

Analysts say the next logical move for Royal Dutch would be an offer to acquire Western Oil Sands.

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