Conoco buys Gulf Canada for $6bn

The deal will increase Conoco's North American and Southeast Asian reserves

The US oil and gas giant Conoco has agreed to acquire Gulf Canada Resources for $6.3bn (£4.4bn; 7.3bn euros).

The deal will substantially increase Conoco's international oil reserves, particularly in North America and Southeast Asia.

Under the deal, a wholly-owned Canadian subsidiary of Conoco will pay 12.40 Canadian dollars ($8.02) per share, or $4.3bn, for Gulf Canada.

Conoco will also assume about $2bn in Gulf Canada debt.

Archie Dunham: "Excited" by the deal

The price values the Canadian company at 35% more than its Friday closing price.

"The acquisition of Gulf Canada will increase Conoco's North American proved natural gas reserves and production by more than 50%," said chairman and chief executive Archie W Dunham.

He added that the deal establishes Southeast Asia as a strong business area with the addition of Gulf Canada's 72% interest in Gulf Indonesia Resources.

Dick Auchinleck, Gulf Canada's president and chief executive, has agreed to remain as head of the combined company - Gulf Canada and Conoco's subsidiary - during a transition period.

Energy portfolios

Gulf Canada's operations in Canada and Southeast Asia will add to Conoco's presence in the Gulf of Mexico, Venezuela, the Middle East, the Caspian Sea and West Africa.

I'm excited that Dick Auchinleck and I have agreed to combine two impressive energy portfolios and highly performing companies

Archie W Dunham
Conoco

The addition of Gulf Canada's proven oil reserves of more than one billion barrels worldwide would increase Conoco's total reserves by almost 40%, the two companies said.

"I'm excited that Dick Auchinleck and I have agreed to combine two impressive energy portfolios and highly performing companies," added Mr Dunham.

Mr Auchinleck said the deal would provide value for Gulf Canada's shareholders and give employees the opportunity of working for a larger company.