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Calgary-based Waterous Energy Fund says it intends to launch a formal takeover bid for private junior oil sands producer Osum Oil Sands Corp. to raise its ownership stake to 85 per cent.

The private fund is offering to buy to 52.5 million of Osum’s common shares, about 40 per cent of the total, for $2.40 per share or $126 million.

The fund established in 2017 and headed by CEO Adam Waterous bought 45 per cent of the shares last July for the same price from Osum’s three largest shareholders.

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If the takeover offer succeeds, the fund says its intention is to buy the rest of the shares within about three months.

According to a presentation on its website, Osum produced an average of 19,000 barrels of bitumen per day in the first half of 2020 from its two oilsands projects in northeastern Alberta, which employ steam to produce the heavy sticky oil from wells.

It says it has regulatory approval for projects to bring total capacity to 60,000 bpd.

“The proposed transaction provides immediate liquidity and certainty of value to Osum shareholders after 15 years without any dividends or prospects of accessing the public markets,” Waterous said in a news release.

“Osum shareholders should have confidence that fair market value for their shares has been established.”

Waterous says Osum’s next four largest remaining institutional shareholders have agreed to tender their shares under the offer, adding its unlikely a competing bidder will come forward.

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