Globe says UTS, Petrocan get ready for Total domination

2009-01-29 07:05 ET - In the News

Also In the News (C-PCA) Petro-Canada Inc

The Globe and Mail reports in its Thursday edition that France's Total SA is on a path to control the Fort Hills oil sands project and play a leadership role in Alberta's energy future. The Globe's Andrew Willis, writing in Streetwise, says Total late Tuesday made a not-too-surprising $617-million hostile bid for UTS Energy.

It was inevitable that a major would step up for UTS. The company's claim to fame is a 20-per-cent share of Fort Hills. With costs at $21-billion and rising, UTS could no longer see the project through. UTS directors will curse the injustice of a $1.30-a-share bid, but this was up from 83 cents Tuesday. Cursing will not stop investors from selling. The company will go.

The market clearly expects a better bid, as UTS rocketed to $1.73 a share. Teck is already quietly shopping its Fort Hills holding. Petro-Canada, with its 60-per-cent share, seems paralyzed and is seen as unlikely to muster the corporate will needed to knock out Total.

So Mr. Willis figures UTS will up a gallant struggle, but will agree to a higher offer, paving the way for Total to move on Teck's Fort Hills interest.

Look for Petrocan to sell a controlling interest to its new French partner.

Hg