Suncor lands COS deal

Peace has broken out in the Canadian oil patch, with Suncor Energy and Canadian Oil Sands coming to terms on a C$4.2 billion shareholder deal plus C$2.4 billion of debt ending a nasty public battle between the two oil sands giants.

If the deal announced Jan. 18 gets approval from shareholders, regulators and courts, Suncor will control close to half of Syncrude Canada or about 175,000 barrels per day of capacity at the consortium’s bitumen mine, on top of the 400,000-425,000 bpd targeted by Suncor for 2016.

The latest bid will give COS shareholders 0.28 of a Suncor share for each of their shares, a 12 percent bump from the early October offer of 0.25-for-one, but lagging behind Suncor’s offer last April of 0.33.

With no hope of making money at current oil prices, and the prospect of further weakness, COS had more than ample reason to agree to friendly terms.

AltaCorp Capital analyst Nick Lupick said the freshened offer is “effectively the same” as the October bid when Suncor offered C$4.3 billion for COS equity and estimated debt at C$2.3 billion.

COS Chairman Don Lowry said his board has been able to “remain steadfast” in its commitment to maximize value for its shareholders despite a 37 percent decline in spot oil prices over the past three months.

Suncor Chief Executive Officer Steve Williams said he was pleased to have the support of the COS board of directors and major COS shareholder Seymour Schulich, who owns 5 percent of the six-company consortium, who took out full-page ads in two national Canadian newspapers to oppose what he called Suncor’s “giveaway price.”

- GARY PARK