FP says Suncor, others could be hit with unwanted bids 2008-11-21 09:22 ET - In the News See In the News (C-SU) Suncor Energy Inc The Financial Post reports in its Friday edition that oil companies are flush with cash, thanks to the recent period of high energy prices, but at the same time, reinvestment in their core business has lagged.
The Post's Jonathan Ratner, writing in Trading Desk, says this could put Calgary in the middle of a consolidation wave. The world's top five oil companies finished the third quarter with $62-billion in cash and annual cash flow of $232-billion, according to Canaccord Adams. As a result, it expects an increased focus on mergers and acquisitions in the coming year.
Canada and the oil sands could get a lot of attention. Market caps of large-cap energy companies in Canada have declined more than 50 per cent since July. "We believe that major oil companies look beyond the short-term environment, particularly for assets, such as oil sands that have a 40+ year reserve life," Canaccord said.
"There will most likely be several bull market cycles for energy over that time period." Canaccord thinks Suncor, EnCana, Canadian Natural Resources, Talisman and Nexen are all vulnerable to an unsolicited takeover offer. BP, Eni and Total would be interested in Nexen's North Sea assets.
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