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Mobil and Imperial Form E&P Alliance in Canada

Mobil and Imperial Form E&P Alliance in Canada

Mobil Canada and Imperial Oil Ltd. said last week that as of Nov. 15 the companies will form a strategic business alliance to create synergies while pursuing new oil and gas production ventures in Canada. Even though ExxonMobil owns Mobil Canada and a 69.7% majority share of Imperial Oil, the move is not a merger of the company's Canadian assets. Instead, the companies will share common business and operational support services while remaining separate operating entities.

Under the agreement, each company will continue to own and operate its own assets, but will share specialist and technical services in selected areas. Both Imperial and Mobil jointly will pursue new opportunities that are of mutual interest, with Mobil operating on new ventures in eastern Canada, and Imperial operating new projects in northern Canada. Also, shared services groups will be combined within Imperial to provide upstream business and marketing services for both companies.

"Recognizing that the overlap in existing operations between the two companies is minimal, this arrangement is expected to increase the cost competitiveness of both and strengthen our ability to pursue future opportunities," said K.C. Williams, a senior vice-president of Imperial. "The companies will remain as separate entities."

The agreement is expected to realize combined annual savings from the elimination of duplicate work and systems, while the companies capitalize on economies of scale. The companies said they expect a combined annual savings of approximately C$40 million.

Imperial Oil's spokesman Richard O'Farrell said that his company teamed with Mobil Canada and Exxon Mobil to study possible synergy agreements between the Canadian operating subsidiaries, but a merger was never discussed, he said.

Because of the consolidation, the company announced that 270 permanent and contract employee positions will be eliminated. Williams said that reductions will be completed through attrition, re-deployment and severances.

In related news, Mobil Canada announced it is changing its name to ExxonMobil Canada to reflect its merger.

Alex Steis

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