Oil Report

Canadian Oil Sands rises on acquisition chatter

CALGARY, Alberta, Jan 30 (Reuters) - Shares of Canadian Oil Sands Trust COS_u.TO, the biggest shareholder in Syncrude Canada Ltd, rose as much as 5.7 percent on Friday, on rumors that the company could become an acquisition target.

Units of the trust, which holds a 37 percent stake in Syncrude, the world’s biggest oil sands producer, rose 77 Canadian cents to C$19.28 midday on the Toronto Stock Exchange. Earlier they touched C$19.55.

The units have fallen 47 percent over the past 12 months.

Rumors have begun circulating that the company may be an acquisition target, with Imperial Oil Ltd IMO.TO, Syncrude's No. 2 shareholder, seen as a potential buyer for the trust, though analysts said the possibilities of such a deal for the C$9.3 billion ($7.5 billion) trust were remote.

“It would be stretch,” said William Lacey, an analyst at FirstEnergy Capital. “Imperial is pushing ahead with Kearl, and they are pretty debt adverse.” Kearl is the company’s C$8 billion oil sands project

Gordon Wong, a spokesman for Imperial, Canada’s biggest oil explorer and refiner, declined to comment on the speculation.

Analysts say investors may be looking for the next takeover target in Canada's oil sands following the unsolicited C$617 million bid for UTS Energy Corp UTS.TO that French oil major Total SA TOTF.PA launched earlier this week to grab a 20 percent stake in the Fort Hills oil sands project.

“UTS started the whole expectation of ‘who’s next?’,” said Phil Skolnick, an analyst at Genuity Capital Markets.

The rise in Canadian Oil Sands units also came despite a big cut in the trust’s quarterly payout to investors announced earlier this week. The trust cut its distribution to 15 Canadian cents from 75 Canadian cents because of falling oil prices. ($1=$1.23 Canadian) (Reporting by Scott Haggett; Editing by Frank McGurty)