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Providing coverage of Alaska and northern Canada's oil and gas industry
April 2008

Vol. 13, No. 14 Week of April 06, 2008

Enerplus seeks buyers for Joslyn share

Another test of what oil sands assets are worth and whether there are any eager buyers has been set in motion by Enerplus Resources Fund, which is seeking buyers for all or part of its 15 percent stake in the Joslyn project, operated by France’s Total.

Preferring to take control of its own destiny, Enerplus, one of the oldest Canadian income trusts, has put the asset on the market.

Based on an estimated share of 315 million to 370 million barrels, the Joslyn stake could fetch C$315 million to C$460 million, Tristone Capital analyst Cristina Lopez told the Calgary Herald, predicting there should be “some decent bids.”

It hasn’t exactly worked out that way for Synenco Energy, which has been immersed in a strategic review for the past 10 months that is widely interpreted as seeking outright sale of its 60 percent stake in the Northern Lights project, which has a resource base of 1.67 billion barrels (994 million barrels net to Synenco).

Enerplus hasn’t always appeared on the same wave-length as Total, which took control of Joslyn after its 2005 takeover of Deer Creek Energy, with the two companies seeming to be at odds over the pace and scope of development. (Enerplus took its Joslyn stake in 2002).

Trust has 90% at Kirby

The trust said its 90 percent operating role in the Kirby oil sands partnership “provides enhanced control over the timing and nature of our capital spending profile.”

Its current plans for Kirby include a 10,000-barrel-per-day operation starting in 2011, growing to 30,000-40,000 bpd by 2017 with an operating life of 25 years, exploiting a 43,460-acre lease that has current contingent resources of 244 million barrels.

Enerplus said its “low-risk, distribution-oriented business model necessitates a portfolio of assets that provide near-term cash flow, future growth potential and an appropriate balance of commodities.”

To that end it is open to a full range of proposals from outright sale to partial sale or an asset swap.

The initial betting is that Joslyn is the obvious candidate to acquire the Enerplus holding. Its other partners are Japanese exploration company Inpex Holdings at 10 percent and Laricina Energy1 percent.

Total is aiming to achieve oil sands production of 250,000 bpd by 2015, including 100,000 bpd from Joslyn’s North Mine by late 2012, although an initial 10,000 bpd has encountered some problems and start up may be stalled from early this year to 2009.

—Gary Park






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