Market Caps Down
Carrie Tait, Financial Post Canada
Andrew Barr, National Post (See hardcopy for Chart/Graph)
CALGARY – Canadian oil and gas companies are ripe for becoming merger bait -and we’re not talking about the small and medium-sized shops. The biggies — Suncor Energy Inc. (SU/TSX), En- Cana Corp. (ECA/TSX), Canadian Natural Resources Ltd. (CNQ/TSX), Talisman Energy Inc. (TLM/TSX) and Nexen Inc. (NXY/TSX) — could all be targets for the world’s super biggies.
“In case you didn’t think there was money around, the super majors have lots,” said Terry Peters, an analyst at Canaccord Adams, in a research note last week that riffed off an article in Petroleum Intelligence Weekly (PIW).
“The super majors have money, motive and opportunity and some of our larger Canadian companies appear vulnerable.”
As of June 30, 2008, Exxon Mobil Corp. (XOM/TSX), Royal Dutch Shell PLC (RDSa/NYSE), Total S. A. (TOT/NYSE), and Chevron Corp. (CVX/NYSE) collectively have about US$65-billion in cash, with more pouring into their coffers at current oil prices.
To put that number in perspective, EnCana’s market cap its now $33-billion, down 54% from its peak. Suncor’s market cap is now $26-billion; Canadian Natural’s market cap totals $29-billion; and Talisman rings in at $11-billion.
Nexen, now with a market cap of $9-billion, down from $23-billion, looks like a mere grease spot compared to the war chests of super majors.
These five Canadian giants have lost an average of 57% of their market caps from their peak levels, according to Mr. Peters’ math. PIW fingered all five as potential takeover targets.
There’s precedent for mega-mergers during rough times. Between 1998 and 2001, Exxon and Mobil Corp. became one, BP PLC (BP/NYSE) made Amoco Corp. disappear, Conoco Inc. and Philips Petroleum Co. (COP/NYSE) merged, as did Chevron Corp. and Texaco Inc.
Grand total of this merger party? US$165-billion, Mr. Peters noted. That’s US$57-billion more than the combined market caps of the five potential Canadian takeover candidates.
Further, those mergers happened when some experts were calling for oil to slump to US$5 per barrel. Suddenly oil below US$100 — or US$80 or US$60 or so on — looks not so bad after all.
With sluggish economies pushing down oil and gas prices, the world’s largest energy companies need to focus on “fundamental production and reserve growth,” rather than simply riding high on energy prices. As a result, the oil sands could well suit the fancy of the international powerhouses.
“The emphasis of Suncor and Canadian Natural, and to a lesser extent EnCana and Nexen, on the oil sands business would certainly fit with the notion of a long-term supply of reserves, production and cash flow,” Mr. Peters said in his research note.
The weakening Canadian dollar helps, too. Enter Suncor and its Canadian cousins — or perhaps it’s exit Suncor and all the others.
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.
