Athabasca Oil Corp. is optimistic that a joint venture with a state-owned company can be rekindled now that the federal government has laid the ground rules for takeovers and partnerships with foreign buyers.
Athabasca CEO Sveinung Svarte said he hopes to finalize the deal to sell stakes in two Alberta oil sands projects to companies from Kuwait and Spain that balked at what is expected to be a $2-billion joint venture while awaiting Ottawa’s ruling on foreign ownership of Canadian companies.
Any fears have since been eliminated after Ottawa approved CNOOC Ltd.’s $15.1-billion acquisition of Nexen Inc. on Dec. 7, as well as Petronas’s $6-billion purchase of Progress Energy Resources Corp. When granting its approval, the federal government said other majority acquisitions of oil sands companies by foreign state-owned enterprises would be off limits, while minority interests and joint ventures would be approved.
Athabasca’s joint venture with Kuwait Petroleum Corp. and Repsol YPF SA would help the Calgary-based company develop the Hangingstone and Birch projects, both of which need investments of billions of dollars.
On a conference call to discuss his company’s 2013 capital spending plans, Mr. Svarte said he expects a deal to materialize, but did not say when. He also opened the door to more joint ventures to help develop large land assets in the Duvernay region.
However, he told investors any deal that will help the company develop its natural gas assets in this area won’t be signed in the near future. “We think it’s too early to take partners there,” he said.
Instead, the company will undertake its own capital spending in 2013 – aided by a recent high-yield debt offering that added $550-million to its coffers – and will then reassess its development plans six to nine months into 2013. The company plans to spend nearly $800-million next year to develop its properties.
Still, Mr. Svarte certainly hinted that something could be cooked up, noting Encana’s recent $2.2-billion joint venture with PetroChina to help develop Encana’s large Duvernay land holdings. He added that his company Athabasca won’t need a joint venture to develop his light oil assets because all the “heavy lifting is done.”
Athabasca produces 10,000 barrels of oil equivalent a day. By June 2013, that will climb to between 11,000 and 13,000 barrels.