Private Osum Oil Sands sells prolongation kingship for $92.5M to compensate for expansion
A private Calgary oilsands producer is offered a apportionment of destiny prolongation to lift income to enhance a northern Alberta project, a appropriation process gaining traction in a zone carrying problem attracting investors.
Osum Oil Sands Corp. pronounced Monday it has authorized a 3,000-barrel-per-day enlargement of a Orion plan to take outlay to over 12,000 barrels per day by mid-2019.
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The association pronounced it will compensate for a enlargement with partial of about $92.5 million in money it has lifted by offered to an unnamed customer a 4 per cent share or kingship in all destiny prolongation from Orion.
Similar kingship sales have been used recently by publicly traded Calgary-based oilsands producers BlackPearl Resources Inc., Pengrowth Energy Corp. and Athabasca Oil Corp. to lift enlargement capital.
“It’s a surrogate for arising equity which, during these (share) prices for many issuers, would be rarely dilutive for their shareholder base, even when deliberation a new rebound off of a bottom,” pronounced AltaCorp Capital oilsands researcher Nick Lupick.
“It is really being pitched to companies as an choice source of financing other than debt and equity.”
Best ‘available’ option
Osum CEO Steve Spence says a kingship sale will concede a association to accelerate a staged expansion. Eventually, it aims to strech a regulator-approved ability of 20,000 barrels per day notwithstanding stream low oil prices, hovering around $50 a barrel.
“We looked during all a options and, in a stream business environment, this was a best one accessible to us,” he said.
“It’s a approach of removing some supports to capacitate us to accelerate the enlargement plan … in a comparatively low oil cost environment.”
The association has been financed so distant by private equity, emperor resources and grant funds, as good as private individuals, Spence said.
It used tenure debt to buy Orion, that uses steam to furnish bitumen from wells, in 2014 from Royal Dutch Shell for $325 million, he added.
Earlier this year, as partial of an exodus of unfamiliar companies seeking improved earnings elsewhere, Shell sole many of a oilsands mining resources to Calgary-based Canadian Natural Resources.
Other unfamiliar companies that have reduced or divested oilsands resources embody Norway’s Statoil and Houston-based ConocoPhillips and Marathon Oil.
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Article source: http://www.cbc.ca/news/canada/calgary/osum-oil-sands-royalty-sale-1.4316801?cmp=rss