Shell Acquires BlackRock in C$2.4 Billion Oil Sands Buy

8 May 2006

Shell Canada is acquiring Canadian oil sands company BlackRock Ventures for C$24 per share—approximately C$2.4 billion (US$2.2 billion) on a fully-diluted basis. The offer represents a 27% per cent premium over Friday's closing price of $18.88 per share.

The acquisition will add 12,000 to 14,000 barrels per day of heavy oil production to Shell and provide the company with significant additional resources—which Shell certainly needs. In its most recent quarterly report, released last week, Shell posted a drop in crude oil production of 8.6% compared to the first quarter of 2005.

The company also announced that tight markets for oil services and supplies would make it less likely it would achieve its 100% oil and gas reserve replacement target over the 2004-2008 period.

This acquisition is consistent with our growth plan, and BlackRock’s assets are an excellent fit with our Peace River in-situ assets.

—Clive Mather, President and CEO Shell Canada

BlackRock’s primary production focus is on Seal, Alberta, located in the Peace River Oilsands. Blackrock began exploring at Seal in 1999 and has more than 80,000 net acres of land there.

BlackRock estimates that its working interest share of oil in place is in excess of one billion barrels of oil at Seal. A key component in determining the economic value of the play is to establish appropriate reservoir recovery rates. In addition to primary recovery, the Seal acreage could be amenable to secondary and tertiary recovery from waterflooding or thermal applications, which could increase these recovery factors.