Shell Canada offers to buy Duvernay Oil

Royal Dutch Shell PLC on July 14 offered to buy Canada’s Duvernay Oil Corp. for $C5.19 billion in cash, in a move to nearly double its North American natural gas production. Shell is offering $C83 per share for Alberta-based Duvernay Oil, which plans to triple its natural gas production of about 25,000 barrels of oil equivalent per day to about 70,000 boe by 2012.

Based on Duverney’s 62.5 million shares outstanding, according to Capital IQ, the transaction is valued at $5.16 billion. Including assumed debt, Royal Dutch Shell says the acquisition is worth $5.9 billion.

Royal Dutch Shell said Duvernay’s board recommends the deal to shareholders, and directors and officers holding a combined 18.1 percent stake have agreed to vote in favor of the bid. Duvernay has agreed to pay a fee of $119.4 million dollars in the event the deal doesn’t go through.

Shell has about 80,000 boe per day of tight gas production in North America, and has been building its acreage positions for future growth. Duvernay holds about 450,000 acres of land in the western Canadian sedimentary basin.

—The Associated Press