In a joint venture worth around C $475 million (approx. US $412 million), Canadian Oil Sands Trust looks set to purchase a 1.25% indirect interest in the Syncrude project from Talisman Energy.
The acquisition will be made through the company’s subsidiary, Canadian Oil Sands.
The deal includes C $237.5 million (approx. US $206 million) in cash and 8 189 655 Canadian Oil Sands Trust Units. The company will finance the cash through existing credit.
According to Canadian Oil Sands, the transaction will increase its interest in Syncrude from 35.49% to 36.74%, with a commensurate increase in reserves and production.
The Trust anticipates releasing its specific production targets before the end of December, when it will also detail other performance measures for the year.
“We are pleased to consolidate another piece of Syncrude. We consider Syncrude to be the best oil sands project today with its superior resource holdings, newly expanded production infrastructure and nearly 30 years of operating experience,” said Marcel Coutu, president and CEO of Canadian Oil Sands.
Talisman’s 1.25% interest is held through units in Canadian Oil Sands, which holds a five percent interest in the Syncrude joint venture. The partnership is already controlled and 75% owned by Canadian Oil Sands.
The transaction was effective as of December 1 and is expected to close on or before February 28, 2007.
“The transaction is modestly accretive, increasing reserves and production per Trust unit outstanding by approximately two percent. Furthermore, Talisman’s preference to retain some exposure to Syncrude through Canadian Oil Sands Trust’s equity leaves our balance sheet relatively unchanged,” added Coutu.
Talisman has also sold its two percent royalty in Suncor Energy’s undeveloped Lease 23 to Suncor for C $107.5 million (approx. US $93.4 million), which is adjacent to Suncor’s Steepbank oil sands mining operation in Alberta.
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