Occidental Petroleum became the latest major energy company to reverse field on Monday when it dropped $500-million to buy back into Alberta's oil sands, returning to an area that it walked away from eight years ago.
Occidental, the fourth largest player in U.S. oil and gas, bought a 15-per-cent stake in the Joslyn oil sands project from Enerplus Resources Fund. This makes the Los Angeles-based company a junior partner on the project to France's Total.
"This acquisition is consistent with our strategy of focusing on long lived, large resource in-place projects," said Occidental CEO Ray Irani. He said this in a news release, so it's hard to tell whether he was being ironic. But the flip-flop is undeniable.
Occidental spun off its oil sands holdings and other Canadian assets back in April, 2000, in a deal that created Nexen. Occidental sold its Canadian unit when its share were trading $9. Nexen is now changing hands at $41.49.
In Occidental's defence, mighty British Petroleum has also gone 180 degrees when it comes to the oil sands. Under the previous regime, it sold its position in the play to Canadian Natural Resources.
When new leadership arrived last year, BP jumped back into Alberta, striking a $5.5-billion partnership with Husky Energy in December, 2007. BP is expected to increase its oil sands exposure, and now seems likely to be bidding against Occidental as well as other global and large domestic players for big, high quality assets.
RBC Dominion Securities advised Enerplus on the sale of its Joslyn stake. The energy trust's short-term plan is to use the $500-million to knock down debt. The long term strategy is to acquire new reserves.