Shell Canada Ltd. offered to pay Duvernay Oil Corp. C$5.9 billion in cash in a bid to acquire half a million net acres in the Western Canadian Sedimentary Basin (WCSB), which includes acreage in the emerging Montney tight gas trend of northeastern British Columbia.
The Royal Dutch Shell plc subsidiary's offer would value Duvernay at C$83/share, including debt, which is a 36% premium over Duvernay's average share price in the past month.
"Shell has a proven track record in North America tight gas activities," said CEO Jeroen van der Veer. "Duvernay could become a valuable part of the Shell portfolio, where we can add value through technology and scale."
Duvernay, which was founded in 2001, has around 1,800 square kilometers (450,000 acres) of acreage in the WCSB. The company, based in Calgary, currently is producing more than 25,000 boe/d, mostly natural gas, and has plans to up production to around 70,000 boe/d by 2012.
Duvernay's two large gas projects are the Sunset-Groundbirch in northeastern British Columbia and in the deeper, western portion of the WCSB. Duvernay also owns and controls the natural gas processing and delivery infrastructure in both of the project areas.
Shell is now producing about 80,000 boe/d of tight gas production in the Pinedale Anticline of Wyoming, South Texas and the WCSB. Shell also has acreage in the Haynesville Shale in Louisiana.
Duvernay's board has voted unanimously to recommend the offer to shareholders. Duvernay's directors and officers also entered into lock-up agreements to tender all of their shares to Shell, which in total represent about 18.1% of the total company shares. In addition, Duvernay agreed to pay C$120 million if the transaction is not completed.
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