Shell gets Canadian approval for Duvernay purchase

Tue Aug 19, 2008 7:06pm EDT
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CALGARY, Alberta (Reuters) - Royal Dutch Shell plc RDSa.L said on Tuesday the Canadian government had approved its planned C$5.9 billion ($5.6 billion) acquisition of unconventional gas producer Duvernay Oil Corp DDV.TO.

Shell said the minister of industry and the Competition Bureau had approved the transaction, clearing the way for the purchase.

"Shell Canada has now received all necessary Canadian regulatory approvals to proceed with the acquisition of Duvernay," the company said in a release.

Last month, Shell made a cash offer for Duvernay of C$83 a share, a 42 percent premium over what the stock had commanded on Toronto Stock Exchange.

Duvernay has 1,800 square kilometers (450,000 acres) of land holdings in two provinces, particularly in the prized Montney region in the northeast of British Columbia and in Alberta's Deep Basin, areas Shell hopes to add to its portfolio of tight gas interests.

Tight gas is gas contained in difficult reservoirs, where extraction was once considered too costly. However, high gas prices and advances in technology have led to a surge of investment in such reserves, which are sometimes massive, and Duvernay has one of the best holdings of the resource among mid-sized Canadian companies.

Shell's offer closes on August 22.

($1=$1.06 Canadian)

(Reporting by Scott Haggett; editing by Rob Wilson)