Canadian tar sands company Suncor to buy rival Petro-Canada for $15 billion

Suncor Energy, Canada's No.2 oil company, agreed to buy rival Petro-Canada for about C$18.43 billion ($14.86 billion) to expand its oil sands reserves and create the country's biggest energy group. Petro-Canada has faced pressure to boost the value of its shares due to the company's management failure to boost production and the firm's repeated failures to meet earnings targets. The companies expect to achieve annual operating expenditure reductions of $300 million and to achieve annual capital efficiencies of about $1 billion through elimination of redundant spending and targeting capital budgets to high-return, near term projects. The deal would combine Petro-Canada's extensive retail gasoline and refining business and its international operations with Suncor's extensive operations in the oil sands, where it is the No. 2 producer behind Syncrude Canada.

- I still continue to refrain from buying shares of Canadian oil sands (aka tar sands) companies based on principles of ethics, environment, and EROEI (yeah, they just so happen to be the "Three E's").

But if buying tar sands companies is your thing, and you wish to avoid hassles just like the above, where one company acquires another and you have to start to worry about share additions or subtractions or substitutions, and depending on your country perhaps taxation as well, may I suggest getting an ETF instead, such as the Claymore Oil Sands Sector ETF, symbol CLO on the TSX (Toronto Stock Exchange).

Instead of getting just 1, 2, 3 or more companies, and worrying about them, if you want the entire sector, you can buy the entire sector. It's a nice and neat package, and it's great for investors who are into it on a small-to-medium scale. Of course if you have Big Capital, that's a different story.

Personally, for both myself and the small private investment fund I run as a fund manager, I am advocating the sector or even sub-sector ETF approach. So we are long such ETF's as NLR for nuclear-energy related companies, we are long GDX for gold miners, and we are long PBW for clean energy-related companies. Among other things. On the relatively smaller scale that we are currently running things, it makes for a lot of sense from an asset allocation perspective. Instead of managing dozens of companies, I only need to manage a handful of ETF's. I then worry about the timing and execution of trades of these particular sections of the portfolio, which is exactly what I should do.

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