CALGARY — The next entrant to the oilsands, SilverBirch Energy Corp., will be attractive to investors — so long as they’re patient, a portfolio manager said Thursday.
“It is still just a little bit of a wait-and-see story,” said John Stephenson.
UTS Energy Corp. (TSX:UTS) said Wednesday it would hive off its early-stage oilsands properties into a new publicly traded firm, which would have 50 per cent interest in the Frontier and Equinox properties and some other lands in northeastern Alberta.
UTS’s main asset — a 20 per cent stake in the Fort Hills oilsands mine — will go to France’s Total SA for $1.5 billion.
SilverBirch, which is expected to be headed up by UTS chief executive William Roach, has $50 million in funding to get it through its first 18 months and an initial contingent resource base of about 900 million barrels.
But it’s still early days for those projects, with regulatory approvals for Equinox and Frontier not expected until 2013 at the earliest. Other holdings in the area are still in the exploration phase.
“It’s 10 years or thereabouts until you’ve got the assets fully developed. So it’s a ways to wait,” said Stephenson.
“You’re really putting a bet on management and management’s ability to add value.”
SilverBirch could also be an attractive takeover target, Stephenson added.
“I don’t think it’s going to go right away, but a few years down the road, absolutely,” he said.
More generally, the Total-UTS deal sends a bullish signal about the viability of the oilsands.
“It says that all of a sudden these undeveloped oilsands projects have value, they have significantly more value than people thought they did and the likelihood of more of these types of transactions going forward has increased,” Stephenson said.
“The bloom is back on the rose in the oilsands.”