``When you see a merger like this, it should give oil and gas stocks some strength,'' said Jackee Pratt, who helps manage $712 million at Mavrix Fund Management Inc. in Toronto. ``This bid is saying: The oil sands are worth something, gas is worth something.''
The Standard & Poor's/TSX Composite Index climbed 83.58, or 0.7 percent, to 12,119.15 in Toronto, the highest since Sept. 5. The benchmark reached a record 12,487.32 on April 19 amid soaring oil and metals prices.
Shell Canada jumped C$9.75, or 30 percent, to C$42.55 for the top gain in the S&P/TSX. Royal Dutch Shell offered C$7.7 billion ($6.8 billion) for the 22 percent of Shell Canada that it doesn't own to increase production from oil sands as violence curbs Nigerian supplies and fields mature in the North Sea.
Shell will offer C$40 a share for the Shell Canada stake, it said in a statement. That's 22 percent more than Shell Canada's last closing price. Investors speculated that Royal Dutch will eventually have to pay more to win all of Shell Canada.
``The offer is too low -- the market is telling you that,'' said Len Racioppo, president of Montreal-based money manager Jarislowsky Fraser Ltd., which has about 29.5 million Shell Canada shares among the $54 billion in assets it manages.
Oil Companies `All Open'
Other Canadian oil producers may see takeover offers now that the price of oil has leveled off from records, said Racioppo. Apart from Imperial Oil Ltd., none of the large Canadian oil and gas companies have controlling shareholders, Racioppo said. ``They're all open.''
Canadian Natural Resources Ltd., the second-largest producer of natural gas in the country, gained C$1.68 to C$57.08. Some energy stocks declined. Petro-Canada, the nation's third-biggest oil and gas producer, fell 13 cents to C$46.17.
Imperial rose C$1.87 to C$38.37. Canada's biggest oil and gas producer is 69 percent owned by Exxon Mobil Corp.
NQL Energy Services Inc. jumped C$1.49, or 25 percent, to C$7.51 after National Oilwell Varco Inc., the biggest U.S. maker of oilfield equipment, agreed to acquire NQL for about C$345 million ($306 million).
Crude oil for December delivery fell 0.9 percent to $58.81 a barrel in New York, on doubt that the Organization of Petroleum Exporting Countries will cut production by as much as its members pledged last week. Prices have plunged 25 percent from the record of $78.40 a barrel reached July 14.
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