UTS Energy fights against Total bid

11 February 2009

Canadian oil-sands major UTS Energy Corp's board has unanimously urged shareholders to reject a takeover bid by French oil giant Total SA, saying that Total's offer of C$617 million ($506 million) is "inadequate".

The UTS board has formed a special committee to "pursue various initiatives with the objective of maximizing value for all shareholders", the Calgary-based company stated.

UTS has a 20-per cent stake in the Fort Hills oil mining project in Alberta, while Total, the world's sixth-largest energy company and Europe's third largest, plans to spend $10-15 billion over ten years to develop Alberta oil sands, the largest deposit of crude oil outside the Gulf.

A Total spokesperson said the company will review the UTS rejection over the next few days, adding that the company thinks the offer is "a fair value" for UTS shareholders given the present uncertainties of oil sands development generally and the current environment of the Fort Hills project specifically.

UTS on the other hand called the Total bid "opportunistic", saying that it has invested the equivalent of C$3.57 a share in oil-sands projects. Chairman of the board Dennis Sharp said the bid is inadequate and fails to recognize the full value of the company. "We can do better for our shareholders than what this offer represents," Sharp said.

UTS Energy owns a 20 per cent stake in Alberta's Fort Hills Project, an oil sands field with an estimated four billion barrels of bitumen. Oil is extracted from the tar-like substance using mining techniques. Industry officials estimate the region could yield as much as 175 billion barrels of oil.