By The Canadian Press – For Business Edge
Published: 08/10/2007 – Vol. 7, No. 16
U.S. refiner Marathon Oil Corp. has entered into a $6.6-billion friendly takeover of Western Oil Sands (TSX: WTO), the latest American interest looking to secure a long-term supply of crude from Alberta’s oilsands.
Western, which owns 20 per cent of the massive Athabasca Oil Sands Project in northern Alberta, said in November it was open to a merger with a downstream partner or a complete takeover.
“Marathon provides an exceptional downstream integration opportunity for Western’s growing upstream oilsands production profile, allowing our shareholders to participate across the total value chain including strong refinery margins,” Western CEO Jim Houck told a conference call after the two companies jointly announced the proposed deal.
“This transaction also positions Marathon to capitalize on an attractive long-term and stable supply of synthetic crude oil as they proceed with their refinery expansion programs,” Houck said.
Oilsands production is expected to increase from 1.1 million barrels a day in 2006 to approximately 3.4 million barrels a day in 2015 and 4.4 million barrels a day in 2020. Processing that material has been an increasingly important consideration.
In a $15-billion deal, Calgary-based EnCana Corp (TSX: ECA) and Conoco Phillips created a 50/50 integrated heavy- oil business and allowed EnCana access to the American giant’s refineries.
Other Canadian companies have purchased U.S. refineries. Suncor has two in Colorado and Husky Energy (TSX:HSE) recently purchased one in Ohio.
“Production from the oilsands needs to be upgraded, so what you’re seeing with the Shell and Suncor announcements is their solution to doing that,” said Mark Friesen of FirstEnergy Capital.
“This transaction with Western is a different solution, because Marathon has upgrading capacity,” said Friesen. “They’re putting the pieces together, just slightly differently.”
The proposed deal, a combination of cash and shares, also includes Houston-based Marathon assuming $736.1 million in debt. The deal must be ratified by Western shareholders and that’s not automatic given widespread interest in the company. There is also a $200-million break fee if another bid prevails.
“Although the process has been ongoing for a long time, we believe there is a reasonable chance another bidder emerges,” oil and gas analyst Andrew Potter said in a note to clients of UBS Investment Research.
“On the conference call, WTO stated that other parties did not have a chance to match the (Marathon) offer, which given the relatively small break fee could indicate other bidders will emerge,” said Potter.
In a note to its clients, McLean & Partners Wealth Management Ltd. called the deal “messy and unattractive.”
“We are of the view that this could merely be the opening salvo and that further bids may be forthcoming. It is probable that Royal Dutch and Chevron may come to the table; but there are other possible players as well including Total, ConocoPhillips, not to mention some national oil companies.
“We continue to believe that ultimately a successful takeover could occur at a substantially higher price, in a possible range of $40-45 per share.”
Costs of developing the oilsands have always been expensive but that’s increased dramatically in Alberta’s overheated, labour-strapped economy.
http://www.businessedge.ca/article.cfm/newsID/15995.cfm
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
