Mobil Canada and Imperial Oil Ltd. said last week that as ofNov. 15 the companies will form a strategic business alliance tocreate synergies while pursuing new oil and gas production venturesin Canada. Even though ExxonMobil owns Mobil Canada and a 69.7%majority share of Imperial Oil, the move is not a merger of thecompany’s Canadian assets. Instead, the companies will share commonbusiness and operational support services while remaining separateoperating entities.

Under the agreement, each company will continue to own andoperate its own assets, but will share specialist and technicalservices in selected areas. Both Imperial and Mobil jointly willpursue new opportunities that are of mutual interest, with Mobiloperating on new ventures in eastern Canada, and Imperial operatingnew projects in northern Canada. Also, shared services groups willbe combined within Imperial to provide upstream business andmarketing services for both companies.

“Recognizing that the overlap in existing operations between thetwo companies is minimal, this arrangement is expected to increasethe cost competitiveness of both and strengthen our ability topursue future opportunities,” said K.C. Williams, a seniorvice-president of Imperial. “The companies will remain as separateentities.”

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

Imperial Oil’s spokesman Richard O’Farrell said that his companyteamed with Mobil Canada and Exxon Mobil to study possible synergyagreements between the Canadian operating subsidiaries, but amerger was never discussed, he said.

Because of the consolidation, the company announced that 270permanent 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 nameto ExxonMobil Canada to reflect its merger.

Alex Steis

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