Exxon to buy Canada's Celtic Exploration for C$2.6 billion

CALGARY, Alberta (Reuters) - Exxon Mobil Corp agreed on Wednesday to buy Celtic Exploration Ltd for C$2.6 billion ($2.64 billion), as the world's largest publicly traded energy company looks to raise its presence in some of Western Canada's most promising shale oil and gas regions.

The deal, announced Wednesday, will give Exxon vast tracts in the liquids-rich Montney shale gas region in northeastern British Columbia, joining other world-scale energy companies looking to tap Montney's massive reserves to feed planned liquefied natural gas plants planned for province's Pacific coast.

It will also gain a stake in Alberta's promising Duvernay shale play, an early stage development where peers like Chevron Corp and ConocoPhillips have already taken big stakes.

Exxon and other global oil majors are buying more oil and gas assets in North America as they struggle to boost output in a sector where vast energy resources are tightly controlled by countries like Brazil and Russia.

Exxon Mobil started a big push into in unconventional resources like shale with its 2010 purchase of XTO Energy. Since then, Exxon has steadily added shale gas and shale oil reserves in North America as it struggles to boost production.

"This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio," Andrew Barry, president of ExxonMobil Canada, said in a statement.

In its most recent deal, Exxon agreed last month to buy Denbury Resources Inc's crude oil properties in the Bakken shale for $1.6 billion.

Since it was formed in 2002, Celtic, led by chief executive David Wilson, has focused on finding liquids-rich gas reserves that fetch a premium compared to dry natural gas and on acquiring lands in the most promising of Canada's shale regions.

The Montney region of British Columbia has 450 trillion cubic feet of gas in place, according the province's government, though only a fraction of that could be recovered using the hydraulic fracturing techniques that transformed oil and gas production in North America.

The Duvernay shales, a 50,000 square-kilometer (19,300 square mile) region stretching down the Rocky Mountain foothills of central Alberta which some analysts estimate could contain more than 750 tcf of liquids-rich gas, enough to support the ambitions of the world's largest oil companies.

"It fits the bill for a company like Exxon," said Matthew Taylor, an analyst with National Bank Financial.

Celtic's "management team is known for its exploration expertise and they took it to the level where a major (oil company) can now step in and basically go into gas manufacturing mode," he said.

Exxon said its Canadian subsidiary, ExxonMobil Canada, will pay C$24.50 for each share of Celtic, a 35 percent premium to Celtic's closing price on the Toronto Stock Exchange on Tuesday but below its 52-week high of C$27.08.

But for each common share tendered, Celtic shareholders will also receive half a share in a new spin off company led by Celtic's current management team. The value of the new firm has yet to be determined..

"As the dust settles around this transaction and (Celtic) gets out there and talks a bit more about it, we'll see where it trades," Taylor said. "You would expect a spinco with this caliber of management to garner a premium."

The new company will house a gas property at Grand Cache, Alberta; a liquids-rich natural gas property at Inga, British Columbia; and an oil prospect at Karr, Alberta. Celtic said the net asset value per share of the new company is estimated to be about C$2.32, based on an independent engineering evaluation.

Exxon's bid is the latest in a wave of takeovers in the energy rich provinces of Alberta and British Columbia in Western Canada, where the bulk of Celtic's assets are located.

The Canadian government is currently reviewing Chinese state-owned oil major CNOOC Ltd's C$15.1 billion bid for Nexen Inc C$5.2 billion bid for Progress Energy Resources Corp as it also looks for a foothold in the Montney region.

Celtic shares were up C$8,12, or 45 percent, to C$26.24 by late morning on the Toronto Stock Exchange while Exxon stock climbed $1.07, or 1.1 percent, to $93.44 in New York, the highest since May 2008.

Shares in other Canadian company with Western Canadian shale gas holdings also rose. Paramount Resources Ltd rose C$2.00, or 6.4 percent, to C$33.59 in Toronto while Painted Pony Petroleum Ltd climbed 69 Canadian cents, or 6.4 percent on C$11.44 on the TSX Venture Exchange.

With the acquisition, Exxon will add 545,000 acres of exploration lands in the Montney region and 104,000 acres of Duvernay properties that Celtic estimates contain 128 million barrels of oil equivalent of proved and probable reserves, three quarters of which are natural gas.

Celtic produces 72 million cubic feet of gas per day and 4,000 barrels per day of oil and natural gas liquids.

Including payments for Celtic's convertible debentures, and Celtic's bank debt and working capital obligations, the deal is valued at C$3.1 billion, Celtic said in a statement.

The deal has been unanimously approved by Celtic's board of directors.

($1 = $0.98 Canadian)

(Additional reporting by Euan Rocha in Toronto and Anna Driver in Houston; Editing by Lisa Von Ahn, John Wallace and Sofina Mirza-Reid)

Source: http://news.yahoo.com/exxon-mobil-buy-canadas-celtic-exploration-112131963--finance.html

nate robinson sharia law sharia law new hampshire primary results ron paul molly sims hostess brands