Blackrock Takeover Speculation Sends Shrs Higher >BVI.T
2:39pm ET (Dow Jones Newswires)
By Kamakshi Tandon
Of DOW JONES NEWSWIRES
TORONTO (Dow Jones)--Speculation that Blackrock Ventures Inc. (BVI.T) may be taken over is likely the reason why Blackrock shares traded near their 52-week high Friday.
In Toronto, the stock is up C$1.23, or 7.1%, to C$18.48 on 3.25 million shares. It reached a high of C$18.65 earlier Friday, just below the 52-week high of C$18.68.
Robert Fitzmartyn, an analyst with First Energy Capital, said the stock's gains probably stemmed from "rumors of a takeover by" Shell Canada Ltd. (SHC.T) or another subsidiary of Royal Dutch Shell PLC (RDSA).
Although this is only speculation at this point, Fitzmartyn said, "It's credible in that it would make complete sense lately, from an asset fit (perspective) and the direction that Shell has shown recently."
Fitzmartyn pointed to Blackrock's heavy-oil project in Seal, Alta. as a major attraction for Shell. "Shell has been in the area for quite some time. They have a cyclical steam project, and it probably hasn't been all that profitable given where gas prices have been," he said. "They've watched Blackrock come in and generally exploit the asset conventionally, with far more attractive margins."
"I think they (Shell) have a handle on how big that resource could be and are probably taking a serious look," he said.
Blackrock officials weren't immediately available for comment.
The rumors seemed to take hold earlier this week when Blackrock shares jumped 11% to C$17.93 Tuesday. Fund managers said they were aware of talk about a takeover, with Shell and Total S.A. (TOT) mentioned as possible suitors. They said no price was mentioned.
The stock fell back Wednesday and Thursday before moving higher Friday. The stock is up about 29% in the past three weeks.
Market conditions are also likely a factor in the stock's rise, Fitzmartyn said. "We're in an environment where heavy-oil differentials are very narrow and gas prices are low," he said. "So it's a perfect storm for SAG-D projects. I wouldn't run them at the current levels, but certainly the economics are a lot more favorable."
Blackrock uses the oil-extraction process known as steam-assisted gravity drainage (SAG-D) at its Hilda Lake project in northern Alberta.
A lawsuit against Blackrock filed by the Whitefish Lake First Nation was discontinued on Thursday, but Fitzmartyn said this had been widely expected. "In my view, and the institutional view, the lawsuit had no merit."
First Energy had an investment-banking relationship with Blackrock within the past 12 months, but Fitzmartyn doesn't own the stock.
Company Web Site: blackrock-ven.com |
