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Laricina Energy Ltd., a private Alberta oil sands developer, has abandoned a long-planned initial public offering as the energy market has deteriorated and is now weighing a sale of the company.
Laricina, whose largest shareholder is the Canada Pension Plan Investment Board, has hired Bank of Montreal, Peters & Co. Ltd. and Morgan Stanley as financial advisers as it studies alternatives to raise money to complete its projects. A sale of assets or the entire company are among the possibilities, spokeswoman Heidi Christensen Brown said.
Efforts to finance its multimillion-dollar Germain and Saleski ventures have been hampered by Ottawa's changes to foreign investment rules in late 2012, effectively barring state-owned enterprises from taking controlling stakes in oil sands projects, and more recently, worsening conditions in energy and equity markets, Ms. Christensen Brown said.
The company has also been working to build up enough data from its major projects to show their potential.
"We reached that point, and then the market turned. So the timing's been off, in more ways than one," she said.
Engineering for Saleski, a development with a cost estimate of $520-million, is 60 per cent complete. The company is shooting to have 90 per cent of the engineering and design done before giving it the green light.
Laricina is among several small developers to struggle in the oil sands in recent years. Sunshine Oil Sands Ltd. and Southern Pacific Resource Corp. have come under pressure due to cost overruns and operational problems. Laricina's woes appear to be mostly financial, however.
Its operations are in the Grosmont Carbonates, which are distinct from the Athabasca Oil Sands where the bulk of development has taken place. Known for complex geology, no company has yet produced oil commercially from the deposit.
As recently as September, the company said it aimed to raise $500-million of capital, "driven by favourable external market conditions." That money was to be used for the first phase of Saleski.
CPPIB has a 14 per cent stake in Laricina. Its other owners include Lime Rock Partners, Kayne Anderson Capital Advisors LP and Mount Kellett Capital Management LP.
Ms. Christensen Brown said the company will make its confidential data available to third parties soon and hopes to have the process completed by the end of the first quarter of 2015.
Jeffrey Jones