Big oilsands players gobble up smaller stakes

CALGARY — Northern Alberta is a patchwork of motley oilsands properties, with some chunks controlled by energy heavyweights and others in the hands of smaller companies.

CALGARY — Northern Alberta is a patchwork of motley oilsands properties, with some chunks controlled by energy heavyweights and others in the hands of smaller companies.

With virtually all of the premium morsels already spoken for, the map is expected change significantly as the bigger players consolidate their positions by gobbling up smaller holdings.

“There’s lots of checker-boarding. There’s lots of little pieces,” said Bob Schulz, professor with the University of Calgary’s Haskayne School of Business.

Potential acquirers want to snap bits of land that are adjacent to properties they already have, since it’s more efficient to develop them that way.

“I’d expect to see some swapping some assets and also some outright purchases,” Schulz said.

Oilsands junior Opti Canada Inc. (TSX:OPC) said last week it was exploring strategic alternatives, including the sale of the whole company or some of its assets.

Opti is best known for its 35 per cent stake in the Long Lake project, which is controlled by Nexen Inc. (TSX:NXY). The project used to be an evenly-split joint venture, but Nexen increased its stake nearly a year ago.

Both companies are often cited as potential takeover targets. Opti in particular sees its share price spike every time a large international firm makes is rumoured to be on the hunt for oilsands assets.

Another relatively small oilsands name, UTS Energy Corp. (TSX:UTS), recently sold its half-interest in its Lease 421 properties to Imperial Oil Ltd. (TSX:IMO) and its parent Exxon Mobil Corp. (NYSE:XOM), the world’s largest publicly traded energy company.

The sale, which garnered the firm $200 million after tax, was the culmination of a strategic review UTS undertook in response to a hostile takeover bid from French energy giant Total S.A.’s Canadian arm.

UTS’s main asset remains its 20 per cent stake in the stalled Fort Hills oilsands project, the future of which has not yet been determined by its operator, Suncor Energy Inc. (TSX:SU).

Suncor took on its 60 per cent stake in Fort Hills through its merger with Petro-Canada in August, and is set to lay out its 2010 spending plans to investors on Friday.

Consolidation will likely also take place within the Syncrude Canada Ltd. partnership, the world’s largest oilsands development, now that ConocoPhillips (NYSE:COP) is putting its nine per cent stake on the block as part of a US$10-billion divestiture package.

“I think the oilsands is where people should be concentrated. It’s sort of a surprising move from Conoco’s standpoint,” said John Stephenson, portfolio manager with First Asset Investment Management in Toronto.

Fellow Syncrude partners Canadian Oil Sands Trust (TSX:COS), the biggest stakeholder, and Imperial Oil Ltd., the next largest, are thought to be the most likely candidates to snap up Conoco’s interest.

But it’s possible a buyer could come from outside the consortium — potentially from abroad.

China made its first major foray into the oilsands through China National Petroleum Corp.’s $1.9-billion investment in two of privately held Athabasca Oil Sands Corp.’s properties.

“It wouldn’t surprise me to see CNPC take a bigger bite out of some of the bigger projects Athabasca Oil Sands has,” the University of Calgary’s Schulz said.

“It wouldn’t surprise me if CNPC then takes a look at some other companies.”

Korea’s state-owed energy firm Korea National Oil Corp. acquired a smattering of small oilsands leases through its $4.1-billion acquisition of Harvest Energy Trust (TSX:HTE), which is better known for conventional production in western Canada and a refinery in Come by Chance, N.L.

India’s state-owned company hasn’t made a move in the oilsands yet, but it may eventually in an effort to secure more energy for its burgeoning population.

The Netherlands’ Royal Dutch Shell PLC (NYSE:RDS), France’s Total, and Norway’s Statoil Hydro are already oilsands players and may look to bulk up their positions there in the years ahead.

One of the biggest problems major energy firms in the United States and abroad face is how to ensure they have enough crude reserves to power their businesses decades into the future.

Since developing the oilsands doesn’t require exploration — huge swaths of earth in northern Alberta is literally soaked with 175 billion barrels of crude reserves — Canada will be a key part of those companies’ growth strategies.

“One thing the oilsands gives you is this 50 or 100 year reserve life. That’s extremely attractive to a company that is looking to extend their reserve life,” said Stephenson.

“I think ultimately there’ll be more interest from these offshore foreign buyers, who see this as not just strictly an economic transaction. They also see it as a strategic imperative.

“The history of oil is one where countries have gone to war to have access to it because if you don’t have available oil, industry really grinds to a halt.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Whistle Stop Cafe owner Christopher Scott and his sister Melodie pose for a photo at the Mirror restaurant. (File photo by Advocate staff)
Alberta Health Services delivers ‘closure order’ to Mirror restaurant

Alberta Health Services says it has delivered a closure order to a… Continue reading

Flags bearers hold the Canadian flag high during the Flags of Remembrance ceremony in Sylvan Lake in this October file photo. (Photo by Sean McIntosh/Advocate staff)
New project to pay tribute to Canadians killed in Afghanistan

Flags of Remembrance scheduled for Sept. 11

A health-care worker prepares a dose of the Pfizer-BioNTech COVID-19 vaccine at a clinic in Toronto on Thursday, January 7, 2021. THE CANADIAN PRESS/Nathan Denette
Alberta vaccine rollout expanding to front-line health-care workers

More than 240,000 eligible health-care workers can begin booking vaccine appointments starting… Continue reading

File photo
The Red Deer Rebels will have three new assistant coaches when the WHL regular season starts on Friday. Brad Flynn (left), will be on the bench alongside fellow assistant Ryan Colville (right) head coach Brent Sutter (middle). (Photo by BYRON HACKETT/Advocate Staff)
Sutter steps down as Red Deer Rebels head coach

Red Deer Rebels Owner, GM and head coach Brent Sutter has stepped… Continue reading

Red Deer-South MLA Jason Stephan is among those who have signed an open letter criticizing the government’s return to stricter health measures. (Advocate file photo).
Updated: Kenney tells UCP caucus COVID-19 dissent OK, breaking health rules means expulsion

15 MLAs released letter on Wednesday critical of new health restrictions

A woman pays her repects at a roadblock in Portapique, N.S. on Wednesday, April 22, 2020. The joint public inquiry in response to the April mass shooting in Nova Scotia has announced a mandate that includes a probe of the RCMP response as well as the role of gender-based violence in the tragedy. THE CANADIAN PRESS/Andrew Vaughan
Creating permanent memorial to Nova Scotia mass shooting victims a delicate task

PORTAPIQUE, N.S. — Creating a memorial for those killed in Nova Scotia’s… Continue reading

Conservative leader Erin O'Toole holds a press conference on Parliament Hill in Ottawa on Tuesday, April 6, 2020. Top Tory leaders of past and present will speak with supporters today about what a conservative economic recovery from COVID-19 could look like. THE CANADIAN PRESS/Sean Kilpatrick
Erin O’Toole says ‘I didn’t hide who I was’ running for Conservative leader

OTTAWA — Erin O’Toole assured Conservative supporters that he never hid who… Continue reading

Calgary Flames' Johnny Gaudreau, second from left, celebrates his goal with teammates, from left to right, Matthew Tkachuk, Noah Hanifin and Rasmus Andersson, of Sweden, during second period NHL hockey action against the Edmonton Oilers, in Calgary, Alta., Saturday, April 10, 2021. THE CANADIAN PRESS/Larry MacDougal
Jacob Markstrom earns shutout as Flames blank Oilers 5-0 in Battle of Alberta

CALGARY — It took Sean Monahan breaking out of his goal-scoring slump… Continue reading

B.C. Premier John Horgan responds to questions during a postelection news conference in Vancouver, on Sunday, October 25, 2020. British Columbia's opposition Liberals and Greens acknowledge the COVID-19 pandemic has presented huge challenges for Horgan's government, but they say Monday's throne speech must outline a coherent plan for the province's economic, health, social and environmental future. THE CANADIAN PRESS/Darryl Dyck
Horgan’s NDP to bring in throne speech in B.C., Opposition wants coherent plan

VICTORIA — British Columbia’s opposition parties acknowledge the COVID-19 pandemic has presented… Continue reading

A grizzly bear walks on a treadmill as Dr. Charles Robbins, right, offers treats as rewards at Washington State University's Bear Research, Education, and Conservation Center in this undated handout photo. Grizzly bears seem to favour gently sloping or flat trails like those commonly used by people, which can affect land management practices in wild areas, says an expert who has written a paper on their travel patterns. THE CANADIAN PRESS/HO, Anthony Carnahan *MANDATORY CREDIT*
Grizzly bears prefer walking on gentle slopes at a leisurely pace like humans: study

VANCOUVER — Grizzly bears seem to favour gently sloping or flat trails… Continue reading

FILE - In this July 27, 2020, file photo, nurse Kathe Olmstead prepares a shot that is part of a possible COVID-19 vaccine, developed by the National Institutes of Health and Moderna Inc., in Binghamton, N.Y. Moderna said Monday, Nov. 16, 2020, its COVID-19 shot provides strong protection against the coronavirus that's surging in the U.S. and around the world. (AP Photo/Hans Pennink, File)
The COVID-19 wasteland: searching for clues to the pandemic in the sewers

OTTAWA — When Ottawa Public Health officials are trying to decide whether… Continue reading

Researchers look over a map aboard the Finnish icebreaker MSV Nordica as it sets sail in the North Pacific Ocean toward the Bering Strait to traverse the Arctic's Northwest Passage on July 6, 2017. The Canadian government wants more study on the impacts of banning heavy fuel oil in the Arctic before it signs on to an international agreement to do so. It has been 16 months since Prime Minister Justin Trudeau and then U.S. President Barack Obama jointly committed to phase down the use of heavy fuel oils in the Arctic. THE CANADIAN PRESS/AP, David Goldman
‘You cannot claim any more:’ Russia seeks bigger piece of Arctic Ocean seabed

IQALUIT, Nunavut — Russia wants to stretch out imaginary lines on the… Continue reading

The Queen, centre, Prince Philip, right, and Princess Anne relax as they sail to Victoria, B.C., on May 3, 1971 accompanied out of Vancouver harbour by numerous small craft. Prince Philip, the Queen's husband of more than 70 years, passed away at Windsor Castle on Friday, Buckingham Palace announced. THE CANADIAN PRESS/Bill Croke
Andrew: Philip’s death has left ‘huge void’ in queen’s life

LONDON — The death of Prince Philip has left a “huge void”… Continue reading

Most Read