Key private oil sands players in financing mode

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Now that the rules of engagement for investing in the oil sands are clear-cut, both Osum Corp. and Laricina Energy are looking for cash.

Until now, both major private players have been supported by large private equity investors, and it looks as though that will remain true for some time. According to someone familiar with the fundraising process, the same types of firms are lining up to invest this time around – though there are rumours that a Chinese player could also put up some cash.

For years now there has been speculation that Laricina or Osum could go public – particularly in the case of Laricina, which addressed the issue in public – but the markets just haven't stayed solid enough, for long enough, to make that happen.

There's also been too much political uncertainty. Laricina tried to raise money in the private market last fall, but investors balked because no one knew how the government would rule.

Now that the rules are set, both companies hope to secure financing. The big question is at what price. The market for all oil sands investors has cooled since the last equity raises – in part because of things like the discount for Canadian crude – so it will be interesting to see how excited the financial backers are. For Laricina, something north of $30 a share should provide some confidence.

(Tim Kiladze is a Globe and Mail Capital Markets Reporter.)