Exxon Mobil agreed on Wednesday to buy Celtic Exploration for about $3.1 billion in cash and stock, as the American oil giant seeks to expand its presence in the gas- and oil-rich shale of western Canada.
Under the terms of the deal Exxon will pay about 24.50 Canadian dollars a share, a 35 percent premium to Celtic's closing price on Tuesday and 34 percent higher than the Canadian company's 30-day volume-weighted average stock price.
Existing Celtic shareholders will also receive 0.5 of a share in a new company that will be led by Celtic's current management team.
Investors who own Celtic's convertible unsecured subordinated debentures will exchange their holdings for common shares in the company, which will then be swapped for the 24.50 Canadian dollars and 0.5 of a share in the new explorer.
The takeover is the latest effort by major oil concerns to plumb the oil-rich rock formations of North America, including the Alberta province where Celtic i s based. In July, the Chinese company Cnooc bid $15 billion for Nexen, a significantly bigger explorer based in Calgary in large part to tap into the shale boom.
And Exxon has proved interested in finding new shale formations that it can drill, fortified with technology gained from its $31 billion acquisition of XTO Energy in 2009.
Founded in 2002, Celtic focuses its exploration and production of oil, natural gas and related liquids in west central Alberta, particularly in the Montney and Duvernay shale formations. Its holdings produce about 72 million cubic feet per day of natural gas and 4,000 barrels per day of crude oil, condensate and other liquids. And it is estimated to hold 128 million oil equivalent barrels of proved and probable reserves.
But Celtic's shares have fallen nearly 25 percent over the past 12 months, as the company has been hurt by a prolonged trough in natural gas prices.
In the wake of the Nexen deal, however, some analysts spe culated that it may be an attractive takeover target for oil companies seeking to gain toeholds in the Alberta shale region.
“This acquisition will add significant liquids-rich resources to our existing North American unconventional portfolio,†Andrew Barry, the president of ExxonMobil Canada, said in a statement. “Our financial and technical strength will enable us to maximize resource value by leveraging the experience of ExxonMobil subsidiary XTO Energy.â€
The deal is subject to approval by Celtic shareholders and debenture holders, as well as Canadian government regulators.
Celtic was advised by FirstEnergy Capital, RBC Capital Markets and the law firm Borden Ladner Gervais.
