The long, difficult battle for the shares of Canadian Southern Petroleum is finally nearing an end, with white knight Canadian Oil Sands Trust beating out hostile takeover bids by Petro-Canada and Canadian Superior and obtaining 65% of the company’s outstanding shares.
The trust has extended its offer of US$13.10/share until Sept. 6. So far it has purchased 9.8 million Canadian Southern common shares. Its offer was subject to the company obtaining a minimum of 50.01% of the outstanding common shares. Canadian Oil Sands intends to acquire the remaining common shares not tendered to its offer by way of a compulsory acquisition, statutory arrangement, amalgamation, merger, reorganization, consolidation, recapitalization or other type of acquisition transaction or transactions for an amount in cash that equals US$13.10/share.
“Having now acquired control of Canada Southern, we encourage remaining shareholders to tender to our offer, which is unanimously recommended by Canada Southern’s board of directors,” said Canadian Oil Sands CEO Marcel Coutu. “We would also note that U.S. securities rules dictate that this will be the final opportunity to tender to our offer.”
Canadian Oil Sands is Canada’s largest income trust and currently is a pure-play oilsands operator with 35% of the Syncrude joint venture in northern Alberta. The white knight bidder plans to sell Canadian Southern’s conventional assets in the Yukon, northeastern B.C. and southern Alberta and their associated 1,200 boe/d of production as soon as possible once the deal is closed.
The big attraction of Calgary-based Canada Southern has been its 39,000 net acres in the Canadian Arctic Islands. Canada Southern estimates its potential Arctic gas reserves at about a net 927 Bcfe, which is 68 times greater than its current 13.7 Bcfe of proved and probable reserves. Canadian Oil Sands sees the assets as a physical hedge for fueling its oilsands operations and intends to sit on those assets hoping that at some point they will be developed to supply a natural gas liquefaction plant.
However, it remains to be seen whether the main arctic lands holder, Petro-Canada, with 187,000 acres, will ever develop such a facility.
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