HOUSTON: ExxonMobil Corp and Imperial Oil Ltd have agreed to buy ConocoPhillips’ Clyden lease for about C$751m ($723m), expanding their holdings in the booming Alberta oil-sands region.
The sale includes 226,000 net acres of undeveloped land near the southern edge of the Athabasca oil sands, Houston-based ConocoPhillips said. Under the agreement, ExxonMobil will hold 72.5 percent of the leasehold and Calgary-based Imperial, which ExxonMobil controls, will have 27.5 percent, the companies said.
It’s the second Canadian purchase in 10 months for Irving, Texas-based ExxonMobil, which agreed to pay C$2.86bn for Celtic Exploration in October, gaining access to shale regions in Alberta and British Columbia. Canada has the world’s third- largest oil reserves, after Venezuela and Saudi Arabia, and its output is expected to more than double by 2030, according to the Canadian Association of Petroleum Producers.
Oil-sands projects offer “the same predictable production” for years, as companies like Exxon face declining output from conventional oil fields, said Fadel Gheit, an analyst with Oppenheimer & Co in New York.
output fall
ExxonMobil said in March that its combined oil and gas production will fall for a second straight year as it builds platforms and pipelines to bring recent discoveries online. The sale is expected to close in the third quarter and requires approval from Canada’s Competition Bureau, ConocoPhillips said. ExxonMobil is the largest shareholder in Imperial Oil, with a 70 percent stake as of February 13, according to data compiled by Bloomberg.
ExxonMobil plans to bring in a partner, reducing its stake to 27.5 percent while it keeps majority control of the project with Imperial, the companies said.
Imperial has been expanding output from its oil-sands holding, including the C$12.9bn Kearl project in Alberta which began production in April. Kearl is on schedule to produce 110,000 barrels a day by the end of the year, the company said on August 1.
For Imperial Oil “this seems like a logical bolt-on acquisition that’s easy to integrate,” Pavel Molchanov, an analyst with Raymond James & Associates Inc in Houston, said. He has the equivalent of a buy on ExxonMobil and a sell on ConocoPhillips and doesn’t own either shares.
ConocoPhillips has been selling assets for more than three years to focus on more profitable areas. Chief Financial Officer Jeff Sheets said earlier this month ConocoPhillips might reduce its oil-sands holdings. The company expects about $13.5bn from its 2012-2013 asset sales programme, including $3.8bn received through the end of June.
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