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Suncor Energy to acquire Petro-Canada in mega oil deal

Published: 17:02 23 Mar 2009 GMT

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Two of Canada’s largest energy groups, Suncor Energy (TSX & NYSE:SU) and Petro-Canada (TSX: PCE, NYSE: PCZ) announced that they had agreed to merge in a mega deal that will create a new Canadian oil heavyweight.

Suncor is offering 1.28 shares for every Petro-Canada share, valuing the combined entity at around US$42 billion.  The offer from Suncor represents a 25% premium, and post merger, Petro-Canada shareholders will hold 40% of the enlarged company. Suncor will have 8 seats on the new board of directors, with Petro-Canada taking the remaining four. Suncor’s President & CEO, Rick George, and Chairman John Ferguson, will remain at the helm of the combined entity.

The merged company will have some 7.5 billion barrels of oil equivalent (‘boe’) of developed and undeveloped proved and probable reserves and around 19 billion barrels of contingent resources.  Total group production will be 680,000 barrels of oil equivalent per day (boe/d) with producing assets in Canada, Latin America, North Africa and the UK North Sea.  The combined group will have a particularly strong presence in Canada’s oil sands sector.  Suncor went on to add that is expected annual synergy savings of US$300 million.

"This merger creates a made-in-Canada energy leader with the assets, cost structure and financial strength to compete globally," said Rick George, President and CEO of Suncor. "The combined portfolio boasts the largest oil sands resource position, a strong Canadian downstream brand, solid conventional exploration and production assets, and low-cost production from Canada's east coast and internationally."

"Both Petro-Canada and Suncor have a history of innovation and pushing the frontiers of oil and gas development in Canada. And just as importantly, both companies have taken a leadership position in striving to develop not just resources, but also communities, the Canadian economy and our quality of life. We've both put a strong focus on people and our shared environment and together, I expect that focus to be even stronger as we move forward."

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