Shell Canada's Mather sees consolidation

NEW YORK (Reuters) - Shell Canada Ltd. SHC.TO Chief Executive Clive Mather said on Tuesday he expects further consolidation among Canada's heavy oil industry and that his company will be among the buyers.

Mather earlier this month agreed to pay C$2.4 billion ($2.2 billion) for BlackRock Ventures Inc., a small Canadian heavy oil and oil sands company. He told the Reuters Global Energy Summit in New York that more deals in the sector will soon emerge.

"I suspect there will have to be further consolidation going forward," Mather said.

"I don't think (merger and acquisition) activity is going to stop soon. And from our point of view we want to ensure we maintain our position as one of the major players in heavy oil."

Shell Canada, 78-percent owned by Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz), is expanding its Canadian oil sands operations. The company's plans include a multibillion dollar investment in its oil sands mine and upgrading refinery in northern Alberta, boosting capacity to half-a-million barrels of oil over the next decade from about a current 155,000 barrels a day.

The Calgary, Alberta-based firm is also planning a 100,000 barrel a day oil sands operation in Alberta's Peace River region, adjacent to some BlackRock operations.

The acquisition of BlackRock, which closes next month, adds 14,000 barrels of oil a day to Shell Canada's production, a 6.7 percent boost. It is the first corporate purchase carried out by Shell Canada in two decades, but Mather said the deal won't strain his company's balance sheet or threaten its debt rating.

Further purchases will come if potential targets are not priced too high, he added.

"We will continue to look at opportunities as they present themselves which offer value," he said. "You can buy assets and you can buy companies, but can you get them at a price that is attractive, long-term, to you?"  Continued...