Canadian giants Suncor Energy and Petro-Canada have agreed to merge into a new integrated energy company that’ll produce 680,000 barrels of oil equivalent per day and cut their combined expenses by $300 million while creating $1 billion in extra value in sheer scale.
The deal, front-page news in Canada, produces a company with a combined market worth of over $43 billion.
Supermajor Shell produces 3.25 Bboe/d — over three times as much oil and gas as the merger partners — while StatoilHydro produces 1.7 MMboe/d, or more than twice as much, although the Canadians count only burned volumes and not wellhead volumes. The Canuck companies look to 7.9 Bboe in reserves, while recently combined StatoilHydro claims 6 Bboe in future production.
In justifying the move, company leadership sited a need to pool resources to get at remaining oil sands value and bolster stakes offshore Eastern Canada. They sounded like StatoilHydro leadership just months ago in their tip-toeing around public sentiments toward a national brand.
"The increased scale provides more stability in volatile markets, plus the financial and organizational capability to successfully take on large-scale projects in the future," said Ron Brenneman, Petro-Canada exec until he becomes executive vice-chairman of the merged company.
Suncor, the new name of the combination, will sell a Petro-Canada retail brand fuelled by a combined 433,000 barrels per day in refinery capacity. Suncor, the new name of the merged outfit, has alwasy been linked to oil sands production, five times Petro-Canada’s.
The new entity can boast 530,000 barrels of oil and 908 million cubic feet per day of production and $30.38 billion in assets.
Thousands of Petro-Canada shareholders are expected to gain under a stock deal that puts a 25 percent premium to the price their shares were trading at. Suncor shareholders, who get one share in the new company for the each bit of equity they owned, will own 60 percent of the merged company.