Marathon Acquiring Western Oil Sands
VIRGINIA GALT
Globe and Mail Update
July 31, 2007 at 3:40 PM EDT
Western Oil Sands has agreed to be taken over by Marathon Oil Corp. for $5.84-billion, a deal that gives the United States oil company a stake in Canada's oil sands.
Shares in the Calgary-based oil company were up by 9 per cent, to $37.20, in mid-morning trading on the Toronto Stock Exchange after the companies announced their plans Tuesday.
Western Oil Sands shareholders are to receive $35.50 in cash or 0.5932 of a Marathon share for each of their shares, and will also get stock in a spinoff company holding Western's assets in Kurdistan in Northern Iraq. Marathon will pay about $3.8 billion in cash, plus 34.3 million shares, for Western, and will also assume about $736.1 million of debt.
The spin off of Western's subsidiary, WesternZagros, must take place prior to closing, Marathon said.
This file photo shows oil sands mining in progress at the Muskeg River Mine in the Albian Sands project near Fort McMurray, Alberta. Albian Sands is a joint venture by Shell Canada, Chevron Canada and Western Oil Sands.<BR><BR>On Tuesday, Western Oil Sands said it had agreed to be taken over by Marathon Oil in a deal valued at $6.6-billion.
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This file photo shows oil sands mining in progress at the Muskeg River Mine in the Albian Sands project near Fort McMurray, Alberta. Albian Sands is a joint venture by Shell Canada, Chevron Canada and Western Oil Sands.
On Tuesday, Western Oil Sands said it had agreed to be taken over by Marathon Oil in a deal valued at $6.6-billion. (The Globe and Mail)
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Marathon Oil's share performance over the last 52 weeks
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“The Athabasca Oil Sands Project is truly a world-class asset with multi-billion barrel, long-life resource potential,” said Clarence P. Cazalot, Jr., President and chief executive officer of Marathon.
“Marathon's strategically advantaged U.S. Midwest downstream business is well positioned to provide both near and long-term solutions to maximize the value of these substantial bitumen resources. We are joining an ongoing and expanding project with strong partners, and collectively, we will be able to apply our technical and commercial skills to maximize both the recovery and value of these resources,” Mr. Cazalot said.
Western's primary asset is a 20-per-cent undivided interest in the Athabasca Oil Sands Project. Western is also pursuing initiatives related to in-situ and technology development as well as downstream opportunities, the Calgary-based company said yesterday. WesternZagros is involved in conventional oil and gas exploration opportunities in the Federal Region of Kurdistan.
Jim Houck, Western's president and chief executive officer, said the deal “accomplishes our key objective of capturing an integrated upstream and downstream opportunity and maximizing value for our shareholders.”
In a “first read” research note issued after the deal was announced, UBS Investment Research said that “although the process has been ongoing for a long time, we believe there is a reasonable chance another bidder emerges.”
UBS said Western officials noted on a conference call Tuesday morning that other parties did not have a chance to match the Mobil offer, “which given the relatively small break fee ($200-million) … could indicate other bidders emerge.”
With files from Canadian Press.
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