Canadian oil giants Suncor and Petro-Canada join in $15.5 billion deal
March 23, 2009
Suncor Energy Inc. will acquire Petro-Canada for $15.5 billion, uniting two of Canada''s biggest oil companies as the nation''s energy industry retrenches, as reported by the Associated Press. If the deal is approved it would lead to the largest oil company in Canada and have a market capitalization of about $38 billion. The companies said they could save $244 million in operating costs and $812 million in capital efficiencies each year. Both companies have put off projects to develop oil sands in Alberta because oil prices now are too low to make the projects viable. Alberta''s once-booming oil sands sector has cooled as every major company has scrapped or delayed some expansion plans as the price of oil has plummeted. Suncor reported a fourth quarter loss in January, the first in its history. Petro-Canada shareholders will hold 40 percent of the enlarged company and Suncor shareholders will hold 60 percent. Both companies are based in Calgary. The deal is subject to approval by shareholders of both companies and government agencies. The two companies explored a merger nine years ago but that it wasn''t a fit at the time. Suncor is the world''s second-largest oil sands producer. Both were once state-owned oil companies. Industry officials estimate the oil sands in northern Alberta could yield as much as 175 billion barrels of oil, making Canada second only to Saudi Arabia in crude oil reserves.