Globe says penny stock UTS not keen on $1.30 offer

2009-01-29 06:54 ET - In the News

The Globe and Mail reports in its Thursday edition that energy giant Total SA has stirred up Alberta's oil patch with its hostile $1.30 bid for UTS Energy.

A triple-bylined item led by Nathan VanderKlippe says observers called the French company's bid a lowball offer. The offer riled UTS, whose stock closed at 83 cents on Tuesday. "You wouldn't even want to print what I'd like to say," said chairman Dennis Sharp.

Total has steadily moved to increase its oil sands presence in recent years, paying $1.7-billion to buy junior Deer Creek Energy and its undeveloped Joslyn mining project in 2005.

Last July it paid another $530-million for Synenco Energy and its share of the also-undeveloped Northern Lights mine. "Our belief is that the price will be there to make these projects economic long term, and for us to unlock and derive value for them," said Total E&P Canada president Michael Borrell.

The price Total is willing to pay has raised eyebrows. Total paid about 43 cents per barrel of recoverable oil sands resource for Synenco.

Once you count the carried interest and the $320-million in cash on UTS books, it is offering 21 cents per barrel for UTS, according to UBS Investment Research

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