ConocoPhillips (COP.N) is seeking a buyer for 50 percent of a large portion of its Canadian oil sands holdings, assets that could eventually produce more than half a million barrels a day, the U.S. oil major said on Monday. ConocoPhillips has retained Scotia Waterous to run the offering of a share in six Alberta properties that currently produce 12,000 barrels a day from an estimated 30 billion barrels of bitumen in place. It is doing so as interest in Canadian energy assets booms, especially from Asian buyers. Tim Bryant, vice-president of ConocoPhillips' Canadian division, declined to say how much the company wants for the holdings, other than to say it would be in the billions of dollars rather than millions. "It's substantial. These are world-class trophy assets," he said.
The one producing project in the package is Surmont, run in a joint venture with France's Total SA (TOTF.PA). Located south of the oil sands hub of Fort McMurray, Alberta, the steam-driven development pumps about 25,000 barrels a day. The partners are working to boost that to 136,000 bpd, starting in 2015. The other properties are the Thornbury, Clyden, Saleski, Crow Lake, McMillan Lake assets. The land totals 715,000 acres. It is difficult to put a potential value on a deal with the information currently available, CIBC World Markets analyst Andrew Potter said. "They give a bitumen-in-place number, but you have no idea how that's attributed by different property," Potter said.
The Houston-based company, in the process of splitting its worldwide production and refining assets into separate companies, is offering the assets at a time when investments in oil sands are piling up, especially from Chinese and other Asian companies. In the latest deal two weeks ago, PetroChina (601857.SS) agreed to buy out its partner in a newly approved tar sands development for C$680 million ($674 million). Chinese enterprises have spent nearly $5.5 billion on Canadian energy assets in the past six months. ConocoPhillips is no stranger to such dealmaking, having sold its interest in the Syncrude Canada oil sands mining venture to Sinopec (600028.SS) for $4.7 billion in 2010.
"I think you can presume that Asian buyers will be looking at it. There might also be some good opportunities for other operators to tuck in around some existing properties," Potter said.
The company also has a major oil sands and oil refining joint venture with Calgary-based Cenovus Energy Inc (CVE.TO), under which the pair are developing the Foster Creek and Christina Lake projects. The sale of the other interests would be part of a three-year, $20 billion asset disposition the company is in the midst of, Bryant said.
"And it's common to go out and seek partners to try to move some of these bigger projects, he said.