Shell Canada Limited Follows Up Previous Oil Sands Lease Purchase with a $2.2 Billion Takeover Offer

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Researched by Industrial Info Resources (Sugar Land, Texas). Shell Canada Limited (TSX: SHC) (Calgary, Alberta) has made a cash offer for the shares of BlackRock Ventures Limited (TSX: BVI) (Calgary, Alberta). Shell Canada Limited, 78 percent owned by Royal Dutch Shell, is offering $24 CND per share of BlackRock, which equates to a 27 percent premium over the closing share price of BlackRock on Friday May 5, 2006. The offer has the full backing of BlackRock’s Board of Directors. BlackRock currently has approximately 14,000 barrels per day of bitumen production, with more production in the planning phase to come online in the near future. The addition of this production will increase Shell Canada’s daily production by 6.7 percent. In addition to the daily production the acquisition, if successful, will add 209 million barrels of reserves at $11 per barrel.

The price Shell Canada is offering will equate $171,000 CND per barrel of current daily production. For the second time in three months, Royal Dutch Shell has set a new price standard in the oil sands for resources. Back on February 8, 2006, an anonymous buyer under the company name 1122131 Alberta paid a record $465 million CND ($395 million USD) for ten leases in the oil sands patch. That buyer turned out to be Royal Dutch Shell. For details see - Anonymous Buyer Pays a Record $465 Million CND Price for Alberta Oil Sands Land Sale.

The two assets are in close proximity of each other and when combined will represent a large reserve base for Shell Canada to work with. The exact reserves will not be known until Shell Canada begins core drilling activity. Shell Canada already has a 60% ownership stake in another operational oil sands facility operating under the partnership name of Athabasca Oil Sands Project (AOSP), which is currently producing 155,000 barrels per day of synthetic crude oil. Shell Canada has plans to expand that facility up to 500,000 barrels per day by 2013. For details see related news article - Athabasca Oil Sands Project to Expand Canadian Synthetic Crude Oil Production.

All three of these moves gives Shell Canada an ever larger presence in the oil sand patch of Alberta and will be a center piece to Shell Canada’s plan to increase its oil by over 50% from its current 210,000 barrels per day, over the next five years at a cost of approximately $17 billion CND.

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