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Energy

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Of Note:

Calgary-based Tusk Energy Corp. agreed to be acquired in a $257-million transaction by Polar Star Canadian
Oil and Gas Inc. for $2.15 a share,nearly triple Tusk's closing price of 86 cents on Feb. 9.

This is the latest sign that a much-anticipated wave of energy mergers and acquisitions is beginning to hit shore.

"This is probably just the tip of the iceberg."

The appearance of new deals will also help others press ahead.


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More deals expected after Tusk takeover



NATHAN VANDERKLIPPE
Globe and Mail Update
February 11, 2009 at 9:33 AM EST


CALGARY — A surprisingly rich oil patch consolidation announced yesterday is the latest sign that a much-anticipated wave of energy mergers and acquisitions is beginning to hit shore, Calgary deal makers say.

Calgary-based Tusk Energy Corp. agreed to be acquired in a $257-million transaction by Polar Star Canadian Oil and Gas Inc. for $2.15 a share, nearly triple Tusk's closing price of 86 cents on Feb. 9.

That comes after Total SA launched a hostile bid for UTS Energy Corp. two weeks ago, and marks what investment bankers say is the beginning of an expected flurry of activity.

"This is probably just the tip of the iceberg," said Jim Davidson, chairman and chief executive officer of Calgary's FirstEnergy Capital Corp. "There are a lot of other purchasers and sellers that are waiting."

One key trigger is the filing of annual reserve reports, which typically land in February and March, and provide an audited glimpse at a company's asset base. That's crucial to buyers looking for solid information on acquisition targets. Add that to a sector struggling with tight credit and the challenge of financing its way through low commodity prices, and acquisition interest levels are surging, said Tom Ebbern, managing director of investment banking at Calgary's Tristone Capital.

The financial turmoil and commodity price crash last fall made for a very quiet year-end for energy-focused investment bankers, who watched deals collapse under the weight of economic uncertainty. Some of those deals are now being revived, while others are beginning to appear. "I think on a number of transactions basis, '09 will be a big year," Mr. Ebbern said.

The appearance of new deals will also help others press ahead, observers said. The values of both the Tusk transaction - which received unanimous support from the company's board, but needs two-thirds shareholder support - and UTS, which has rejected the Total bid and begun searching for a white knight, will help markets understand what companies are worth today.

"UTS is going to be a very fascinating data point, to see what is the international interest for an asset like that. People are looking at that very closely," said Shane Fildes, who leads BMO Nesbitt Burns' Canadian energy group.

But most important, he said, is that those sellers who initially resisted buyer entreaties last fall on hopes that crude - and their own worth - would quickly rebound are now beginning to accept they are living in a world where $40 (U.S.) oil isn't going away.


http://business.theglobeandmail.com/servlet/story/RTGAM.20090211.wrmergers11/BNStory/energy

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