IN THE NEWS / Exxon-Mobil Say Shape Of Merger In Canada Undecided
(U.S. dollars unless otherwise indicated)
Chief executives of Exxon Corp. and Mobil Corp. , the U.S. oil titans who announced a mammoth merger on Tuesday, have left oil-patch watchers guessing how the marriage will shape up in Canada.
The Canadian affiliates of Irving, Texas-based Exxon and Mobil of Fairfax, Virginia, play dominant roles in most parts of the country's energy sector and speculation has been rampant over how they could be put together.
But at a news conference in New York to give details of $76-billion worldwide deal, Exxon CEO Lee Raymond said the fates of his majority owned affiliate, Imperial Oil Ltd. , and of Mobil Oil Canada had yet to be decided.
"That's one of those questions that we haven't gotten to yet," Raymond said. "I understand all the interest in Canada, but until we have some more time to understand more details about the Mobil operation in Canada, it would be premature for me to comment on that."
Exxon owns 69.6 percent of Toronto-based Imperial, Canada's biggest energy company. Imperial is the No. 1 seller of gasoline nationwide and a dominant force in oil sands mining, synthetic crude processing and heavy oil production.
Mobil's wholly owned Canadian division, meanwhile, has a commanding presence in the country's burgeoning East Coast offshore oil play, where it has major stakes in the Hibernia and Terra Nova oil developments off Newfoundland.
The Exxon and Mobil merger, announced on Tuesday following days of speculation, would create the world's biggest oil company and reshape the energy industry.
The deal, hammered out amid the lowest oil prices in real terms in 25 years, aims to gain total savings of $2.8 billion.
Imperial officials on Tuesday declined to speculate how the Exxon-Mobil merger would play out in Canada.
"Imperial Oil is not a direct party to the agreement," said spokesman Richard O'Farrell. "We're looking at this and we'll take some time...we can't speculate on the implications of how the merger might be implemented in Canada."
Canadian analysts have welcomed the potential for Exxon and Mobil to marry Canadian operations, saying the new company would dominate the energy landscape and add sizzle to Imperial, known for its ability to generate piles of cash from gasoline retailing and oil sands projects like Syncrude Canada Ltd. and its big Cold Lake, Alberta, heavy oil play.
Rather than buying companies for growth, as many of its peers have done, Imperial has for years used its cash to pay special dividends to shareholders and buy back its own stock.
Analysts have suggested it could buy Mobil Canada for upwards of C$4 billion within the context of the larger deal.
Scotia Capital Markets analyst Duncan Mathieson pointed out such a deal would raise few hackles among competition regulators because there is little overlap between the two.
"The merger of Imperial Oil and Mobil Canada is a very, very good fit from an asset point of view," Mathieson said.
He said the fate of Canadian operations would likely be made known once the two U.S. oil majors had all other approvals to merge in place. Exxon and Mobil said they hoped to complete their merger by mid-1999.
Imperial, which has about 7,000 employees, produced an average of 293,000 barrels of oil and 350 million cubic feet of gas a day during the third quarter.
Mobil Canada employs 950 and produces an average of 95,000 barrels of oil and 500 million cubic feet of gas a day.
Imperial shares on the Toronto Stock Exchange closed up C$0.35 to C$28 on Tuesday. |
