|
Eying ConocoPhillips’ Syncrude stake
Gary Park For Petroleum News
The hottest guessing game in Canada’s oil patch these days is who will emerge as frontrunner if ConocoPhillips delivers on a strong hint that it is ready to unload a 9.03 percent stake in Syncrude Canada.
Among analysts and observers, the obvious contenders are Canadian Oil Sands Trust, COST, with its dominant 36.74 percent stake in the consortium and Imperial Oil, with 25 percent.
To no one’s surprise neither is talking.
But there are foreign interests to consider, especially the Asian companies — PetroChina and Koran National Oil Corp. — that have made serious inroads in the oil sands over recent months.
Then there’s a wild card: The government-owned Alberta Investment Management Corp., which has C$70 billion invested in a wide range of assets, but has moved its portfolio away from its home province.
But Leo de Bever, chief executive officer of AIMCo., said in October that the issue is not whether the assets are based in Alberta. The overriding priority is whether they make economic sense and generate expected returns.
Triggering the speculation was the comment by ConocoPhillips Chief Executive Officer Jim Mulva that the Syncrude stake — carrying present market value of about C$3.56 billion — could be part of his company’s plans to offload about US$10 billion worth of assets.
COST seen as logical buyer Analysts have earmarked COST as the logical buyer, based on statements by Chief Executive Officer Marcel Coutu in October that the trust’s preference is to grow by consolidating Syncrude ownership, as it has done on three previous occasions.
The other consortium partners are Suncor Energy at 12 percent following its takeover of Petro-Canada, Nexen 7.23 percent, Murphy Oil 5 percent and Mocal Energy 5 percent.
Syncrude crude oil production averaged 312,000 barrels per day in the third quarter, down 4,000 bpd from a year earlier because of unplanned maintenance, with year-to-date output averaging 264,000 bpd, off 19,000 bpd from the same period of 2008.
Coutu said in a statement Oct. 28 that with heavy maintenance completed, Syncrude production “should remain strong for the rest of the year.”
In COST’s 2010 guidance, he forecast “steadier operations,” averaging 315,000 bpd, or 90 percent of the current design capacity.
Operating costs rising Per-barrel operating costs for next year are expected to average C$35, compared with C$27.80 in the third quarter (down C$4.35 from a year ago) and C$37.39 for the first nine months, an increase of C$1.03.
COST said the slowdown in oil sands development should lower costs through more competitive access to labor and materials, but cautioned that because of industry-wide wage agreements labor will “respond much slower to changing market conditions.”
“We continue to believe the most significant factor in reducing costs is better operational reliability,” COST said.
The trust has budgeted C$406 million for maintenance and C$133 million for Syncrude’s emissions reduction project.
COST reported net income for the latest quarter of C$247 million, or C51 cents per trust unit, compared with C$604 million, or C$1.25 per unit, in the same period a year ago
Coutu said that when COST becomes a corporation in late 2010 or early 2011, in response to the change in Canadian government tax status for trusts, it expects to continue paying a dividend.
| 