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
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
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.
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