TORONTO: Shell Canada Ltd. said Monday it has made a C$2.4-billion offer to take over Calagary-based heavy oil producer BlackRock Ventures Inc.
The company, majority-owned by Royal Dutch Shell, said it has entered into an agreement under which it will offer C$24 in cash for a share of BlackRock, which is at a premium of 27 per cent over the Friday closing price on the Toronto Stock Exchange.
BlackRock's board is unanimously recommending the friendly offer to the shareholders. Directors, officers and stockholders of the company, together constituting 21 per cent, have already agreed to sell their shares to Shell Canada.
Announcing the offer, Clive Mather, Shell Canada's president and chief executive officer, said the acquisition will augment the company's overall oil sands portfolio. "It will add 12,000 to 14,000 barrels per day of heavy oil production and provide Shell Canada with access to significant additional resources," he said.
The agreement provides for a payment of C$65 million to Shell Canada as non-completion fee in certain circumstances. However, BlackRock will have right to respond to superior bids.
BlackRock, which began operations in 1996, is headed by president John Festival. Its exploratory area, located in northern Alberta, may contain 175 billion barrels of recoverable oil, second only to Saudi Arabia's 259 billion barrels, says the Canadian Association of Petroleum Producers.
The company has announced that it earned C$3.2 million for the quarter ended 31 March, compared with net earnings of C$876,000 in the corresponding 2005 period. Its revenues for the quarter rose to C$60.9 million from C$36.8 million.
Shell Canada is ranked fourth among Canadian oil and natural-gas producers, behind Imperial Oil Ltd., EnCana Corp. and Petro-Canada.
