Feb. 4 (Bloomberg) -- UTS Energy Corp., the Canadian oil- sands explorer targeted by Total SA, sustained gains to trade more than 30 percent above the French company’s bid price for a sixth straight day as investors anticipated an increased offer.

Total offered C$617 million ($503 million), or C$1.30 a share, on Jan. 28 for UTS, seeking its third acquisition since July of so-called unconventional assets. UTS, a Calgary-based company that’s never pumped a barrel of crude and owns a stake in the Fort Hills oil-mining project in Alberta, is reviewing alternatives to the unsolicited approach and has advised shareholders to take no action.

Paris-based Total, the world’s sixth-largest energy company, plans to spend $10 billion to $15 billion over 10 years to develop oil sands near the Athabasca River in northeastern Alberta, home to the largest crude reserves outside Saudi Arabia. Such projects won’t make money unless crude is at least $80 a barrel, almost double the current price, said Andy Byrne, a senior analyst at IHS Herold.

“The market’s expecting a higher bid,” said Justin Bouchard, an analyst at Raymond James Ltd. in Vancouver who rates the shares a “buy”. “It’s a big resource, as big as it gets, and although there are challenges to developing it, primarily capital, we’re talking about billions of barrels of oil.”

Shares Rise

UTS was unchanged at C$1.70 on the Toronto Stock Exchange, 31 percent above the French company’s bid. UTS has more than doubled this year, the best performance among the 60 members in Standard & Poor’s index of Toronto-traded energy companies.

Total may be prompted to increase its offer to fend off potential rival bidders such as Petro-Canada or Royal Dutch Shell Plc, said Bouchard, who doubled his target price for UTS stock to C$2.50 on Jan. 29.

Calgary-based Petro-Canada and Shell, the world’s third- largest oil company by market value, harvest oil sands in the same area of Alberta where UTS’s interests are located, which would reduce their costs to consolidate operations, Bouchard said today in a telephone interview.

“This is the time you’d want to try to do something like this because assets are cheap,” said Byrne, a former exploration geologist.

Petro-Canada has no plans to buy partner UTS’s stake in Fort Hills and would welcome Total’s participation should the French company’s bid succeed, said Petro-Canada spokesman Peter Symons.

Boon to Project

Total’s financial strength and technical expertise would be a boon to the Fort Hills project, Symons said. Total had cash equivalent of $18.6 billion as of Sept. 30, almost a fivefold increase from a year earlier, according to data compiled by Bloomberg.

Total is focusing on the oil sands because of expertise gained from operations in Venezuela’s Orinoco region, which involves extracting thick, heavy crude similar to the bitumen harvested in Alberta, Byrne said.

Other analysts said that depressed oil price levels may deter buying interest. Crude oil for March delivery fell 46 cents, or 1.1 percent, to $40.32 a barrel at the close of floor trading on the New York Mercantile Exchange.

“As long as the oil price stays around these levels, the less reason there is to raise the offer,” Jason Kenney, an Edinburgh-based analyst at ING Wholesale, said over the phone in an interview. Kenney doesn’t expect other majors to come with a counterbid as he said they don’t have the same sort of synergies as Total. Kenney has a “buy” rating on Total stock.

Shale Deposits

The offer for UTS follows Total’s announcement last month of a plan to buy a 50 percent stake in ITD Corp. unit American Shale Oil LLC, which holds a lease to assess commercial shale production in western Colorado.

Hard-to-access shale deposits are a potential source of natural gas that Total Chief Executive Officer Christophe de Margerie has said would require crude oil at more than $80 or $90 a barrel to be profitable.

Total has stakes in Athabasca’s producing Joslyn and Surmont ventures, and in the Northern Lights project acquired through the purchase of Synenco Energy Inc. last year.

UTS’s main asset is a 20 percent interest in the C$25.3 billion Fort Hills development, which holds about 4 billion barrels of bitumen, and is also half-owner of leases on oil- soaked land west of the Athabasca River in Alberta covering an area 21 times the size of Manhattan.

Waiting for Response

“We would consider the possibility of acquiring additional interests” in the Fort Hills venture, Total spokesman Paul Floren said Jan. 28 by telephone. “We are waiting for UTS to respond,” Lisa Wyler, spokeswoman for the French company, added today, noting the offer is valid 60 days. It will remain open until March 30.

The Fort Hills venture is 60 percent-owned by Petro-Canada, the country’s third-largest oil company, which last November delayed the venture on rising costs and falling crude prices. Teck Cominco Ltd. has a 20 percent interest.

Teck Cominco spokeswoman Sarah Goodman didn’t immediately return a message left at her Vancouver office.

Companies can get oil from processing bitumen dug from mines or coaxed from the ground using steam. It takes two tons of oil sands to make one barrel of oil.

Oil-sands ventures will be profitable with crude at $95 to $100 in coming decades, according to Ryan Todd, an analyst for Deutsche Bank AG in New York, who says bitumen can be tapped at existing projects for roughly $40 a barrel.

Fort Hills Costs

About C$1.7 billion has been spent on the Fort Hills project to date, according to operator Petro-Canada. A final investment decision on the first phase, involving 160,000 barrels a day of bitumen, should be made by 2010 and production may start in 2013, Total said. A second phase would add 160,000 more barrels a day.

Shell said Oct. 30 it’s pressing ahead with the first expansion phase of its Athabasca oil-sands project while putting further investment there on hold because of mounting local construction costs.

To contact the reporters responsible for this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Fred Pals in Amsterdam at fpals@bloomberg.net

Last Updated: February 4, 2009 16:44 EST