After a full review of the offer, COS had determined that the bid is not in the best interests of the company and its shareholders.
Canadian Oil Sands chairman of the board Donald Lowry said that the offer substantially undervalues the COS ownership in the 326,000 barrel per day Syncrude mining and upgrading project in the Athabasca oil sands region near Fort McMurray, Alberta.
Canadian Oil Sands owns 36.74% interest in the Syncrude project, which is claimed to be the largest producer of light, sweet synthetic oil from Canada’s oil sands.
Syncrude project is owned by seven oil producers including Imperial Oil Resources with 25% stake; Nexen Oil Sands Partnership 7.23%; Sinopec Oil Sands Partnership and Sinopec Oil Sands Partnership each with 9.03%; as well as Mocal Energy and Murphy Oil Company each holding 5%.
The company also added that the Suncor bid timing is opportunistic saying that Suncor is attempting to add the proved and probable reserves and 46 year production life of COS without paying a fair price.
COS expects the successful bid would reduce total reserves attributable to COS shareholders by 55%, from 1.6 billion barrels of reserves to 0.7 billion barrels.
In response to the recommendations, Suncor Energy CEO Steve Williams said: "Our offer reflects the new business reality, and when proposed, included a substantial price premium of 43% and a dividend increase of 45%.
"It also represents an opportunity for investment in a financially stronger, more diversified and stable company that has considerable upside potential in a rising price environment, but can also deliver significant value should oil prices stay lower for longer."
Image: Suncor delivers about 500,000 tons of oil sand per day to the ore preparation plants. Photo: Copyright Suncor Energy Inc. 2015.
