Small oil producer Canadian Superior Energy announced late yesterday a takeover bid for Canadian 88 Energy Corp. The stock swap deal would put Canadian 88’s maverick former CEO Greg Noval back in control of the firm.

Canadian Superior President Noval is offering 2.75 Canadian Superior shares for each share of Canadian 88, which he left last year after a change of control. The deal is worth about C$4.95 a share, or C$700 million (US$451 million).

Although the offer was unsolicited, Canadian 88 has been searching for a buyer for months and in February received an C$176 million offer from Hunt Oil Co. for its gas properties in Alberta (see Daily GPI, Feb. 28).

The Canadian Superior deal would create a gas-oriented company, operating primarily in the Alberta Foothills of Western Canada and the Nova Scotia offshore area of Atlantic Canada. Its assets would include 2.4 million gross acres in Western Canada and offshore Nova Scotia, as well as properties currently producing about 85 MMcf/d, a large inventory of high-impact exploration plays covering 750,000 gross (500,000 net) undeveloped acres, an inventory of 200 defined exploitation and development drilling locations and significant midstream assets with an estimated replacement cost of more than C$100 million.

“The merged companies will have one of the best and most exciting inventories of world-class exploration prospects in the Canadian Atlantic and significant Western Canadian exposure,” said Canadian Superior Chairman Don Axford. “Upon completion of the merger, the company will be positioned to capitalize on the enviable situation of being one of Bay Street’s and Wall Street’s best Canadian natural gas energy plays.”

Under the proposed plan, a new board of directors would be formed, including two directors from Canadian Superior, two from Canadian 88, two directors representing major institutional shareholders and two independent directors.

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