OTTAWA (Dow Jones), Nov. 3, 2009
UTS Energy Corp. said Monday it will sell for C$250 million (US$231 million) its 50% stake in three oil sands leases in northeastern Alberta to Imperial Oil Ltd. and Exxon Mobil Corp.
Shares of the Calgary-based oil company rose 2.9% to C$2.10 in recent trading in Toronto. Its American shares recently rose 4.3% to $1.96.
Imperial Oil and Exxon Mobil plan to operate the stake, located east of the Firebag River, in a 50-50 joint venture. "Our two companies are leaders in oil sands development and this will add to our already strong portfolio of assets," Exxon Mobil spokesman Patrick McGinn said. The other half of the stake is owned by Teck Cominco Ltd.
The company said the deal will mark the end of its successful campaign to increase shareholder value in order to fend off a hostile takeover attempt by Total SA earlier this year. Total withdrew its hostile C$830 million bid in April after failing to win over enough UTS shareholders.
UTS estimated after-tax proceeds from the sale of C$200 million, and expects the transaction to close over the next month. UTS said its cash reserves would reach C$440 million after the deal is complete, plus C$695 million in earn-ins owed to it by its Fort Hills Project partners, Suncor Energy Inc. and Teck Cominco.
UTS acquired the leases in late 2006, and drilling found 24 sections with prospective oil reserves, but said it hadn't drilled the area enough to fully determine its potential.
Teck Cominco owns the other 50% stake in the leases -- Imperial Oil and Exxon Mobil will each own half of UTS' 50% stake after the transaction, and operate it in a joint venture. Exxon Mobil owns a majority stake in Imperial Oil.
Imperial Oil is a Calgary-based oil company that is developing the Kearl oil sands project in northeastern Alberta along with Exxon Mobil Canada.
Copyright (c) 2009 Dow Jones & Company, Inc.
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