Exxon/Imperial Oil break drought and ground in West with advice from Blakes, others

File photograph of Exxon Mobil refinery in Baytown, Texas

REUTERS/Jessica Rinaldi/Files

ExxonMobil is no stranger to seeking lucrative oil and gas assets, and ConocoPhillips is conveniently no stranger to selling billions of dollars worth of them. So when ExxonMobil and Imperial Oil Ltd. teamed up to buy ConocoPhillips’ interest in Alberta’s Clyden oil sands leasehold – a $751-million deal that was reported late last week – it seemed mutually beneficial.

The deal, which is expected to close this quarter, comes during what some are calling a drought in deals this year involving the purchase of bitumen-rich lands. Since 2012, Houston-based ConocoPhillips, which is the largest U.S. independent oil company, has had several Alberta oil patch assets – total acreage sitting at about 1.1 million, with an estimated potential of 16 billion barrels – on sale with few takers. This deal represents a break from that.

Imperial Oil/ExxonMobil Canada’s in-house duo of Lara Pella (assistant general counsel) and Ian Laing (counsel) led their respective side from Calgary, with external advice solicited from Blake, Cassels & Graydon LLP with a team that included Ben Rogers and Chris Harris (corporate), and Julie Soloway and Kevin Macdonald (competition).

The agreement will give Exxon 72.5 per cent of the leasehold, while Exxon-controlled Imperial Oil will receive the remaining 27.5 per cent.

ConocoPhillips says it expects to gain US$450 million from the deal. Since the beginning of last year, the oil giant has sold US$13.5-billion in international assets toward increasing its balance sheet.

The deal is reportedly all in cash.

ExxonMobil has been involved in many deals involving similar assets, both at home and abroad. Not too long ago, in February of this year, Blakes’ Rogers was also involved in a $3-billion deal that saw ExxonMobil Canada acquire Celtic Exploration, an Alberta-based oil and natural gas producing company. More recently, it teamed up with PetroChina – that country’s biggest energy firm – to develop Iraq’s West Qurna oilfield.

Canada (estimated proven reserves of 173.105 billion barrels in 2013) has the world’s third-largest oil reserves, with Venezuela (297.6 billion proven barrels) leading and Saudi Arabia (267.91 billion proven barrels) barely trailing the South American country, according to gulfbusiness.com.

Ahmad Hathout

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