Of course, Canada has seen numerous takeovers in the past, especially in resources. They have come in waves: around the turn of the last decade, American acquirers swept up companies like Canadian Hunter Exploration, Gulf Canada and Anderson Exploration. That was followed by a round of oil sands takeovers, with Deer Creek Energy, Synenco Energy and Western Oil Sands falling into European and Asian hands.
In the first two years of the Harper government, foreign acquirers took over several large steel makers and mining companies – including, most notably, Inco and Alcan, two of the largest metals companies. That experience may have proved a wake-up call for Mr. Harper’s government, and explain its desire to keep the rules flexible.
Today, by some estimates, roughly half of Canadian energy is under foreign ownership.
And in Alberta, which expects over $180-billion in oil sands investment in the next decade alone, many see foreign investment as not only inevitable, but critical. Without it, executives, bankers and lawyers say, the province simply could not develop a resource that is among the top sources of crude on earth.
Canadian energy ownership is already incredibly diverse. One 2011 calculation found that in the oil sands alone, 86 companies from 22 nations owned land.
With foreign takeovers of companies like Nexen, and others that may follow, “the oil sands are so large that it’s not like we’re giving away the key ingredient in the treasure,” said Robert Page, a University of Calgary professor of environmental management and sustainability.
Yet even in Calgary, some say there should be exceptions. Take pipelines, which are largely owned by a few Canadian corporations, including TransCanada Corp., Enbridge Inc. and Pembina Pipeline Corp.
“If you’re going to be worried about something strategic, to me it’s the infrastructure you may want to look at as having a more special place,” said Greg Turnbull, a senior Calgary lawyer with McCarthy Tétrault.
Still, some caution against the rise of investments by state-owned enterprises and national oil companies. It is an irony that Canada, which has spent recent decades ridding itself of its own Crown corporations, is now effectively allowing other countries to nationalize its resources, said Jack Mintz, who leads the University of Calgary’s School of Public Policy and serves on the Imperial Oil Ltd. board of directors.
CNOOC that it operates purely according to commercial principles. But “when you look at the whole literature on performance of state-owned enterprises relative to private companies, over time they don’t operate as well,” Mr. Mintz said. And a more inefficient operator carries real risks for Canada, since worse profitability “will affect royalties governments get and wages that people can get paid,” he said.
“That’s why I think one has to ask the question: would even the government of Alberta like to have a lot of state-owned enterprises running their oil industry?”
Suncor Energy Inc.
The oil sands heavyweight. Taking out Suncor would be taking out the top of the Canadian energy industry, a company with a uniquely advantageous position in the oil sands and a source of substantial Canadian jobs. Plus, its $46-billion market cap makes it a tough beast to swallow, and its assumption of the Petro-Canada Participation Act, which restricts takeovers, gives it an added layer of protection.
Canadian Natural Resources
Another Canadian heavyweight, CNRL is a major producer of Canadian energy with a $30-billion market cap. It actually produces more energy than Suncor – nearly 9 per cent more in the first quarter – and its distinctly Canadian growth story makes this company an Alberta treasure.
A certain addition to this list three years ago, less certain now that it shed its oil assets and left itself only natural gas. Still, Encana is a critically important producer of gas, and it has a bit of an ace card: on 42 per cent of its Canadian land, it owns fee title to mineral rights. In other words, it owes no royalties on millions of acres. Having land fall into the hands of a foreigner who pays no royalties is unlikely to win much political favour.
Cenovus Energy Inc.