Imperial, parent Exxon caught in rumor swirl

Imperial Oil, long-accustomed to a stately role as Canada’s largest integrated oil company, is taking an unaccustomed buffeting these days amid speculation that ExxonMobil is preparing to buy out the 30.4 percent it doesn’t already own.

The takeover rumor is driven partly by Royal Dutch Shell’s acquisition of Shell Canada earlier this year.

But there are as many naysayers as there are those fanning the Imperial fires.

Scotia Capital analyst Greg Pardy said takeover talk is being driven by Morgan Stanley’s bullish outlook on refining margins, giving a lift to Imperial which has 521,000 barrels per day of refining capacity in Canada.

Jim Hall, a fund manager at Mawer Investment Management, rated the buyout prospect at less than 50 percent, suggesting ExxonMobil has better ways to use its cash than spending C$15 billion to take total control of Imperial.

The only basis for a deal, in the eyes of some observers, would be if ExxonMobil has plans for large-scale expansion in Canada, with the oil sands topping its list.

Otherwise, they say, the Irving, Texas-based giant would be better off making a run at one of Canada’s independents, such as EnCana, Canadian Natural Resources or Talisman Energy.

—Gary Park