TPT September 2014

Global Marketplace

Takeover-minded Asian energy companies may not be giving up on the Canadian oil sands but adjusting their sights downward While the 2008 toughening of energy policy by the Canadian government of Prime Minister Stephen Harper is only now taking hold (See “ Keystone Pipeline ,” above), an initiative from late 2012 is showing a more immediate effect. The imposition of stricter rules for foreign investment in Canadian companies has prompted some takeover-minded Asian energy firms to shift their attention from large to small opportunities. An example is the purchase, in June, by China Oil and Gas Group Ltd (CNOOC) of a private Canadian energy company for C$236mn. CNOOC, a natural gas distributor as well as an operator of LNG (liquid natural gas) plants and compressed natural-gas filling stations in China, is buying Calgary-based Baccalieu Energy Inc, which put itself on the auction block early this year. Baccalieu operates in west- central Alberta, concentrating on unconventional oil and gas operations in a formation known as the Cardium. As reported by Jeffrey Jones of the Globe and Mail , Baccalieu’s proved and probable reserves are pegged at 22 million barrels of oil equivalent. It produced 4,244 barrels of oil equivalent a THE NEW SPEED CHAMPION! Process Tube and Shapes at Never Before Seen Speed and Accuracy with the ALL NEW DIRECT DRIVE Toolmen CNC Laser Tube Cutter

day in the first quarter of this year. Two-thirds of that was oil and gas liquids, the remainder natural gas. In 2013, Baccalieu earned C$20mn on revenue of C$74.7mn. (”China Is Still Purchasing Canadian Oil Assets – Just Smaller Ones,” 20 June) While the more stringent investment regulations put no new limits on buying energy assets outside the northern Alberta oil sands – the third-largest crude reserves in the world – some investment bankers claimed that the restrictions discouraged potential investors in other energy plays, as well. And, in fact, there had been only a handful of takeovers by foreign companies in the Canadian oil patch since Ottawa essentially closed the door on acquisitions of controlling interests in the oil sands by state-owned foreign firms. But Nick Johnson, managing director of corporate finance at FirstEnergy Capital Corp, Baccalieu’s financial adviser, told Mr Jones in Calgary that he had not perceived any dampening effect. His firm has been involved in three recent deals involving foreign buyers for Canadian energy assets. The preference, Mr Johnson said, is for light-oil plays such as those operated by Baccalieu. › The CNOOC-Baccalieu deal would seem to be entirely amicable. The Chinese energy giant said that the Canadian company’s senior executives, including its CEO and CFO, have agreed to stay on for at least two years to keep developing the business.

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S eptember 2014