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Total adds to total in Synenco Energy
France’s Total made no secret of its determination to complete a takeover of Alberta oil sands startup Synenco Energy.
Having previously extended the deadline on its offer, wholly owned Total E&P Canada effectively locked up the deal July 24 by raising the all-cash offer to C$10.25 a share from C$9 to win over two U.S.-based holdout investors.
As a result of the sweetened offer, Total was able to enter agreements with institutional heavyweights — D.E. Shaw, which owns 14 percent of Synenco, and Wellington Management, with 10 percent — adding them to the 58 percent of shares tendered since April.
The transaction required support from owners of 66 percent of shares, but crossing that threshold required two extensions of the deadline before Total boosted the value of its all-cash offer to C$530 million from an initial C$478 million.
Synenco has 60 percent of Northern Lights oil sands project Synenco controls 60 percent of the Northern Lights project, which has a “best estimate” of 1.657 billion barrels of discovered resource and plans to produce 114,500 barrels per day of bitumen when fully operational, turning that into 100,000 bpd of light sweet synthetic crude over 28 years.
SincoCanada Petroleum, an indirect wholly owned subsidiary of China’s Sinopec, owns the remaining 40 percent of the partnership and project.
In addition, Synenco holds 100 percent of the McClelland oil sands lease adjacent to the Northern Lights lease. Synenco couldn’t carry weight But, despite its innovative attempts to curb costs by unveiling plans to manufacture and import Northern Lights modules from Asia, Synenco was unable to carry the financial weight of building a C$10.7 billion mine and upgrader.
Total has openly declared its goal of producing 500,000 bpd from the oil sands sometime in the next decade.
So far, it has the controlling 74 percent stake in the Joslyn project and plans to use surface mining to develop two phases of 200,000 bpd each.
At the ConocoPhillips-operated Surmont, Total owns 50 percent of the project that started commercial production last November and expects to reach 25,000 bpd by 2012. A second phase due for startup in 2015 is expected to add 75,000 bpd.
Total has also initiated plans to build an upgrader near Edmonton, with capacity of 245,000 bpd, although cost inflation has slowed progress on that venture.
—Gary Park
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