Total announced Monday that it has just entered into an agreement with Synenco Energy Inc., a company listed on the Toronto Stock Exchange, to make a cash offer to acquire all of the common shares of Synenco Energy Inc. at a price of Can$9 per share, or a total amount of close to Can$480 million (or about EUR300 million). This friendly offer has been unanimously approved by the Board of Directors of Synenco Energy Inc., which will recommend the offer to its shareholders.
The offer circular will be published in the coming days, and is expected to be open for acceptance from that date for a period of about 35 to 45 days, subject to the date of receipt of the regulatory approval required from the Canadian authorities.
Synenco's main asset is a 60% stake in the Northern Lights Project. Synenco is the operator of this project in the Athabasca region, in Alberta, at approximately 100 kilometers northeast of Fort McMurray. Sinopec, a Chinese company, is the holder of the remaining 40% stake through its subsidiary SinoCanada Petroleum Corporation.
The latest estimate of contingent resources of the Northern Lights Project published by Synenco is 1.08 billion barrels of bitumen; these resources should be recovered using mining technologies.
An application for the mining development of the Northern Lights Project was submitted to the Alberta authorities in mid-2006 and is being reviewed.
This asset will strengthen Total's portfolio in the Athabasca region comprising principally the Joslyn project that will also be developed by mining techniques and is situated approximately 50 kilometers from the Northern Lights Project.
This acquisition is in line with Total's strategy of expanding its heavy oil operations in the Athabasca region, an industry segment with significant long term development potential.
Total Exploration and Production in Canada
Total is the operator of the Joslyn Lease with a 74% interest. The project will be mainly developed using surface mining technologies in two phases of 100 thousand barrels per day (kb/d) each. A limited portion of the lease is already on stream using SAGD technology (Steam Assisted Gravity Drainage). The production potential of the surface mining phases and of SAGD technology is currently estimated at 230 kb/d.
Total also holds a 50% interest in the Surmont lease, located about 60 kilometers southeast of Fort McMurray. Phase One is already producing, has a capacity of 25 kb/d and is expected to reach plateau production by 2012. Phase One development will be followed by Phase Two, which is slated for commercial start-up before the middle of the next decade.
Phase Two will reach plateau production of 75 kb/d, bringing production for both phases of Surmont to approximately 100 kb/d. Future phases at Surmont are also under study.
Total's share of the aggregate production from Surmont and Joslyn should reach more than 250 kb/d in the next decade.
In addition, the Group has initiated the process to build an upgrader, in the Edmonton area. Phase one of the Total Upgrader should process 150 kb/d of bitumen and could be commissioned before 2015. Phase Two should increase total bitumen processing capacity to over 200 kb/d.