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A key piece of Canada's oil sands is suddenly up for grabs as energy giant ConocoPhillips set plans to sell a 9-per-cent stake in Syncrude currently valued at about $3.6-billion.

ConocoPhillips said it's considering the sale as part of a debt-reduction program that would see it unload $10-billion (U.S.) of assets.

The planned sale of the Syncrude stake could continue a wave of foreign interest in Canada's oil patch and is likely to draw an array of prospective buyers, ranging from pension funds to national oil companies.

"[Syncrude] is a good investment, but we think that there is plenty of interest," ConocoPhillips chief executive officer Jim Mulva told investors on a third-quarter earnings call yesterday.

Analysts and bankers immediately pointed to Canadian Oil Sands Trust as the most likely buyer. The trust owns nearly 37 per cent of Syncrude, has made acquisitions in the past, and has said it is interested in buying more. Based on the value of the trust's current ownership, the ConocoPhillips stake is worth about $3.6-billion (Canadian).

In a recent interview with The Globe and Mail, trust CEO officer Marcel Coutu said, "We'll continue to look outside Syncrude, but our greater interest would be over the fullness of time to consolidate our own partners - when they decide for their own strategic reasons to get out of Syncrude."

Syncrude is seen as a trophy asset in the industry, and the sale of a stake in the miner comes as a rare opportunity for buyers to acquire a stable, producing, well run oil sands project. That makes it far less risky to buy than other oil sands properties, many of which have been sold long before the first drop of bitumen is squeezed from the ground.

Despite ConocoPhillips' stated plan to reduce debt, some analysts questioned why it would sell a piece of a vast resource expected to generate revenue for decades.

"How many asset bases out there do you know of that can produce for 60 years flat, with reasonably low capital reinvestment requirements and in one of the markets that you want to be positioned in - North America?" said William Lacey, an analyst with First Energy Capital Corp.

But because Imperial Oil operates Syncrude, its appeal to other major oil companies may be limited. "It's a very good asset, but it's effectively a financial asset. It's not a strategic asset ... any more," said Dan Barclay, who heads BMO Nesbitt Burns' Canadian mergers and acquisitions group.

That does, however, make it a potential acquisition for a non-oil company with an interest in a long-life, relatively predictable income flow, such as a private equity group or pension fund.

The other possibility: state-owned oil companies, who have become increasingly bold in acquiring Canadian oil properties. Just in the past three months, PetroChina Co. Ltd. has agreed to a $2.1-billion purchase for majority interests in two projects owned by Athabasca Oil Sands Corp., followed by the Korea National Oil Corp.'s $1.8-billion ($4.1-billion, including assumed debt) deal for Harvest Energy Trust.

With files from reporter

Gordon Pitts

ConocoPhillips (COP)

Close: $49.49 (U.S.), down $1.91

CANADIAN OIL SANDS (COS.UN)

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