By Wan Xu and Scott Haggett, Reuters, Calgary Herald
China’s top offshore oil producer, CNOOC Ltd, has agreed to buy struggling Opti Canada Inc. for $34 million and $2 billion in debt, bolstering its position in the Canadian oilsands.
The deal, announced on Wednesday, ends Opti’s two-year search for a buyer willing to absorb its crushing debt and brings CNOOC a 35 per cent stake in the underperforming Long Lake oilsands project in northern Alberta, which has run well under its capacity since opening two years ago.
China has been scouring the globe for energy resources to feed its fast-growing economy, but has often run into regulatory, political and procedural hurdles in getting deals done.
North America’s unconventional energy sources such as shale gas, coal bed methane and oilsands are attracting increasing attention from China and other countries as traditional oil supplies dry up.
“Canada has rich oilsands resources. They have lots of experience in running this kind of project. For CNOOC, they participate in stakes in order to learn the technology and gain operational experience,” said Huang Jing, an analyst at Fubon Security Investment Trust Co. “Ultimately they aim to do oilsands projects in China.”
CNOOC’s move comes amid a flurry of global resource deals as cash-rich companies look to put funds to work. About $22 billion worth of cross-border resource deals have been launched in the past two weeks, according to Thomson Reuters data.
The announcement comes a week after Opti filed for bankruptcy protection. Last week, Opti said half of its secured creditors had agreed to exchange their notes for a newly issued class of common shares and to invest $390 million into the company.
CNOOC will take over Opti’s 35 per cent interest in Long Lake as well as Opti’s interest in three undeveloped properties in northeast Alberta: Kinosis, Leismer, and Cottonwood, with total proven reserves of 195 million barrels of bitumen.
Nexen Inc, a Canadian-based global energy company, holds the remaining 65 per cent in Long Lake, which is Opti’s sole producing asset. Nexen is the operator of Long Lake and also shares Kinosis with Opti.
“We’re supportive of the transaction and welcome CNOOC as a partner,” said Nexen spokesman Pierre Alvarez.
Opti Canada started reviewing its strategic options in November 2009 as it tried to deal with a drop in its share price due to production problems.
Shareholders will receive 12 cents a share in cash, compared with Opti Canada’s last traded price of C$0.115 a share. The stock has not traded since July 12 and has tumbled from a peak of C$25.40 in mid-2008.
The transaction includes $1.18 billion payable to holders of Opti’s second lien notes, $37.5 million payable to backstop parties and the assumption of $825 million first lien notes, Opti Canada said on Wednesday.
The company’s 7.875 per cent senior secured note 68383KAD1 due in December 2014 jumped $11.50 to $64 to yield 24 per cent, while the 8.25 per cent senior secured note 68383KAB5 also due December 2014 jumped $10.5 to $64 to yield 24.5 per cent.
The deal, which is to be effected by a plan of arrangement under Canada’s Companies’ Creditors Arrangement Act, has been approved by Opti’s board.
The deal still needs approval from Chinese and Canadian regulators, Canadian court approval and the backing of second lien noteholders.
CNOOC last year agreed to pay $1.1 billion for a stake in a U.S. shale oil and gas field, testing the U.S. political climate for the first time since its 2005 failed bid for Unocal.
It also paid C$122 million in 2005 for a 16.7 per cent stake in then privately held MEG Energy Ltd, which also operates an oilsands project in northern Alberta.
Not all China-Canada energy deals have come to fruition. Encana’s C$5.4 billion joint-venture shale gas field deal with PetroChina collapsed last month after more than a year of negotiations.
The Opti transaction is expected to be completed in the fourth quarter of 2011.
Read more: http://www.calgaryherald.com/business/Oilpatch+deal+Chinese+giant+CNOOC+takes+over+Canadian+oilsands+developer+Opti/5130791/story.html#ixzz1Ss5cBZaL
The deal, announced on Wednesday, ends Opti’s two-year search for a buyer willing to absorb its crushing debt and brings CNOOC a 35 per cent stake in the underperforming Long Lake oilsands project in northern Alberta, which has run well under its capacity since opening two years ago.
China has been scouring the globe for energy resources to feed its fast-growing economy, but has often run into regulatory, political and procedural hurdles in getting deals done.
North America’s unconventional energy sources such as shale gas, coal bed methane and oilsands are attracting increasing attention from China and other countries as traditional oil supplies dry up.
“Canada has rich oilsands resources. They have lots of experience in running this kind of project. For CNOOC, they participate in stakes in order to learn the technology and gain operational experience,” said Huang Jing, an analyst at Fubon Security Investment Trust Co. “Ultimately they aim to do oilsands projects in China.”
CNOOC’s move comes amid a flurry of global resource deals as cash-rich companies look to put funds to work. About $22 billion worth of cross-border resource deals have been launched in the past two weeks, according to Thomson Reuters data.
The announcement comes a week after Opti filed for bankruptcy protection. Last week, Opti said half of its secured creditors had agreed to exchange their notes for a newly issued class of common shares and to invest $390 million into the company.
CNOOC will take over Opti’s 35 per cent interest in Long Lake as well as Opti’s interest in three undeveloped properties in northeast Alberta: Kinosis, Leismer, and Cottonwood, with total proven reserves of 195 million barrels of bitumen.
Nexen Inc, a Canadian-based global energy company, holds the remaining 65 per cent in Long Lake, which is Opti’s sole producing asset. Nexen is the operator of Long Lake and also shares Kinosis with Opti.
“We’re supportive of the transaction and welcome CNOOC as a partner,” said Nexen spokesman Pierre Alvarez.
Opti Canada started reviewing its strategic options in November 2009 as it tried to deal with a drop in its share price due to production problems.
Shareholders will receive 12 cents a share in cash, compared with Opti Canada’s last traded price of C$0.115 a share. The stock has not traded since July 12 and has tumbled from a peak of C$25.40 in mid-2008.
The transaction includes $1.18 billion payable to holders of Opti’s second lien notes, $37.5 million payable to backstop parties and the assumption of $825 million first lien notes, Opti Canada said on Wednesday.
The company’s 7.875 per cent senior secured note 68383KAD1 due in December 2014 jumped $11.50 to $64 to yield 24 per cent, while the 8.25 per cent senior secured note 68383KAB5 also due December 2014 jumped $10.5 to $64 to yield 24.5 per cent.
The deal, which is to be effected by a plan of arrangement under Canada’s Companies’ Creditors Arrangement Act, has been approved by Opti’s board.
The deal still needs approval from Chinese and Canadian regulators, Canadian court approval and the backing of second lien noteholders.
CNOOC last year agreed to pay $1.1 billion for a stake in a U.S. shale oil and gas field, testing the U.S. political climate for the first time since its 2005 failed bid for Unocal.
It also paid C$122 million in 2005 for a 16.7 per cent stake in then privately held MEG Energy Ltd, which also operates an oilsands project in northern Alberta.
Not all China-Canada energy deals have come to fruition. Encana’s C$5.4 billion joint-venture shale gas field deal with PetroChina collapsed last month after more than a year of negotiations.
The Opti transaction is expected to be completed in the fourth quarter of 2011.
Read more: http://www.calgaryherald.com/business/Oilpatch+deal+Chinese+giant+CNOOC+takes+over+Canadian+oilsands+developer+Opti/5130791/story.html#ixzz1Ss5cBZaL
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