UPDATE 4-Oil major Total to buy Synenco Energy for $471 mln
(Adds environmental review for Joslyn mining project.)
PARIS/CALGARY, Alberta, April 28 (Reuters) - French oil major Total (TOTF.PA) said on Monday it will buy Synenco Energy Inc SYN.TO for about C$480 million ($471 million), in a deal that will boost Total's holdings in Canada's oil sands region and end Synenco's year-long search for a buyer.
Total will offer C$9 for each Synenco share, which represents a premium of around 15.5 percent to Synenco's closing price on Friday of C$7.79.
Total added that the offer -- just more than half the C$17.50 a share Calgary, Alberta-based Synenco received when it went public in 2005 -- had been unanimously approved by Synenco's board of directors.
Synenco's main asset is a 60 percent stake in the 1.66 billion barrel Northern Lights oil sands project. The remaining stake is held by Chinese refiner, Sinopec (600028.SS) (SNP.N).
Synenco said it also has about C$230 million in cash on hand.
The oil sands region of northern Alberta is the world's largest storehouse of oil outside the Middle East.
Production from the region is expected to nearly triple to 3 million barrels a day by 2015 as companies act on plans to invest more than C$100 billion on projects to exploit the resource.
Synenco put itself up for sale a year ago, when the Northern Lights construction budget swelled to C$10.7 billion, nearly double its initial estimate, and it halted plans to build an upgrader to convert the tar-like bitumen into refinery-ready synthetic crude.
The company focused its operation on a planned 113,400 barrel per day oil sands mine, but last month chopped 70 percent of its staff.
"I think (Synenco's) board of directors is probably pretty happy to have a deal," said William Lacey, an analyst with FirstEnergy Capital. Northern Lights "was a marginal project to begin with that's a long way from infrastructure and it's just not that big."
For Total, Synenco offers additional reserves in the oil sands.
Michael Borrell, head of Total's Canadian unit, said the bitumen from Northern Lights could eventually feed the upgrader the company is building for its 74-percent-owned Joslyn oil sands mining project.
The Northern Lights project "is an interesting asset that we think fits well with us as an organization and we'll look to integrate that into (Total Canada's) overall plans," he said.
Total's upgrader will produce 150,000 barrels a day of synthetic crude when completed in 2015. Further phases will boost output to nearly 300,000 bpd.
Canadian Environment Minister John Baird announced on Monday that the 100,000 barrel per day mining portion of the Joslyn project will face a public environmental review staged by the Canadian Environmental Assessment Agency and Alberta's Energy Resources Conservation Board.
Stratege Finance fund manager Valerie Cazaban said the Synenco acquisition made strategic sense for Total.
"It fits in with their strategy, since they already have extensive assets in Canada. It's a means for them to increase their production capacity," said Cazaban, who owns Total shares.
Total shares rose 0.43 percent to 52.715 euros in Paris. The shares have fallen around 7 percent since the start of 2008, broadly in line with the European oil and gas sector.
Synenco stock rose C$1.18, or 15 percent, to close at C$8.97 on the Toronto Stock Exchange.
($1=$1.01 Canadian) (Reporting by Sudip Kar-Gupta and Scott Haggett; Editing by Peter Galloway)
