The proposal will be a cash offer of C$83 per Duvernay share. The offer would value Duvernay’s fully diluted share capital at approximately C$5.9 billion, including debt, and would be a 36% premium over the average share price over the last 30 days.
In connection with the offer, directors and officers of Duvernay have entered into lock-up agreements pursuant to which they have agreed to tender all of their shares in connection with the offer, subject to certain exceptions, representing in aggregate some 18.1% of the fully diluted share capital of Duvernay. In addition, Duvernay has agreed in certain circumstances to pay a non-completion fee of C$120 million, and the parties have agreed to customary non-solicitation covenants.
Duvernay is an acreage holder in the Western Canadian Sedimentary Basin. The company has some 1,800sqkm of landholdings there, including positions in the emerging Montney tight gas trend.
Duvernay has reported over 25,000 barrels oil equivalent per day (boe/d) of production, predominantly in natural gas, with plans to increase production to around 70,000boe/d by 2012. Shell has around 80,000boe/d of tight gas production in North America, and has been building its acreage positions for future growth.
Jeroen van der Veer, Shell’s CEO, said: Shell has a proven track record in North America tight gas activities. Duvernay could become a valuable part of the Shell portfolio, where we can add value through technology and scale. The combination of Duvernay’s acreage with Shell’s proven operating experience and financing capabilities make this transaction attractive to all shareholders.
