It took six months of talks between Athabasca Oil Corp. and Statoil ASA to finalize the sale of the Norwegian oil giant's Canadian thermal oil-sands assets.
But the terms of the deal, worth up to $832-million, indicate that Statoil was in a hurry to exit northern Alberta – the global oil firm says it will book an impairment as high as $550-million (U.S.) on the sale.
"Clearly the divestment brings much needed cash in for what appears to be a non-strategic asset," wrote Royal Bank of Canada analyst Biraj Borkhataria.
"However, it perhaps highlights how tough the sellers' market is currently, with Statoil having to take another equity position in a company in order to reach a deal."
As part of the agreement, Statoil keeps one toe in its Leismer, Alta., site and the undeveloped Corner lease through 20-per-cent ownership in Athabasca. For the next four years, it will also receive revenue-sharing payments from the 24,000 barrels a day Leismer project if and when oil prices go above $65 a barrel.
But the sale is still a significant departure – Statoil is a major international energy player that helped the Canadian oil-sands industry gain global credibility when it came to investment worthiness.
New growth and investment in Alberta's once booming oil sands has been hampered by more than two years of low crude prices, but also concerns about the higher costs and emissions involved with bitumen production – as well as a lack of new pipeline capacity to international markets. At the same time, shale resources in the United States that could bring on massive new light-crude volumes are now drawing investor dollars south.
Statoil is a European oil company with a reputation for climate-change leadership – and the company controlled by the Norwegian government had spent almost a decade defending the oil sands on the international stage when environmentalists targeted the resource for its higher carbon emissions.
Speaking about the sale on Wednesday, the company said it wants to deploy capital to other assets. However, the company's head of corporate sustainability, Bjorn Otto Sverdrup, suggested in a tweet that environmental considerations also played a role.
"Today we announced @Statoil exit of oil sands which bends our cost and emission curves. Building resilience," Mr. Sverdrup tweeted, referring to an image showing a drop in global greenhouse gas emissions as plotted on a graph.
This week's deal adds to the list of European companies retreating from the oil sands. Last year, the Hague-based Royal Dutch Shell PLC scrapped its Carmon Creek oil-sands project. That followed Total SA's decision to sell down its interest in the $15-billion Fort Hills project. Just three months ago, Total chief executive officer Patrick Pouyanné said in an investor presentation that the French company will continue to reduce its exposure to high-cost assets – and cited its 2015 Fort Hills divestment as an example.
Even before this week's news, Statoil had announced more than 200 Canadian job losses as a result of the deferred startup at its Corner project. RS Energy Group analyst Rob Bedin said that given the structure and the dollar amounts involved in the sale of the thermal assets to Athabasca, he was surprised Statoil didn't do a more thorough marketing job. He added Statoil still has financial exposure to the thermal oil sites, and there is "no way" a producer could build equivalent new assets for the sale price.
Athabasca said Thursday that it will keep "core" Statoil staff on the payroll, as well as keeping the Norwegian firm's high environmental standards in place. Analysts generally viewed the deal as beneficial for Athabasca – now established as an intermediate light- and heavy-oil producer – saying it gives the Canadian company a sharp new focus.
Like many oil sector companies, its share price plummeted with the oil price drop in late 2014. On Thursday, the day after the agreement was announced, Athabasca shares jumped by more than 22 per cent on the Toronto Stock Exchange.
"We came up with a creative structure that worked for both sides," said Rob Broen, Athabasca's chief executive officer, speaking about the deal on a conference call.
"We appreciate the patience and long-standing support from our shareholders as we work to transform Athabasca."
With a file from Jeffrey Jones