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Italians nab First Calgary Petroleums
Gary Park For Petroleum News
An end is in sight for the stomach-churning ride shareholders of First Calgary Petroleums have experienced over the past four years.
Once reveling in shares that climbed to C$25 apiece amid feverish speculation over the value of the company’s Algerian assets they now stand to collect only C$3.60 in cash for combined resources of about 1.3 billion barrels of oil equivalent, roughly half of it natural gas.
At various times the potential of the holdings has been estimated at 4.5 trillion to 13 trillion cubic feet of gas, but First Calgary is winding down its life without ever producing a barrel of oil or cubic foot of gas.
Almost a year after chief executive officer Richard Anderson was turfed by disgruntled investors, Italian oil company ENI made a takeover offer of C$923 million Sept. 8. The bid was a 59.2 percent premium to First Calgary’s 30-day weighted average, but 40 percent below the Calgary-based company’s initial public offering price.
Company President Shane O’Leary said his board believed the ENI offer “delivers the highest value” for First Calgary shareholders “compared with other strategic options.”
He said the resources and expertise ENI can bring to the Ledjmet block should “accelerate development” of a field expected to yield a net 30,000 boe per day for ENI by 2012.
ENI strengthening reserves ENI chief executive officer Paolo Scaroni said the transaction was in line with his company’s strategy of increasing its presence in core countries by “acquiring high potential assets.”
The Italian company has been strengthening its reserves and growth potential recently by building upstream assets in Egypt, Yemen, Turkmenistan and the Congo.
ENI is expected to invest about US$1 billion to develop the First Calgary reserves, a financing the Canadian company was unable to achieve, leading to its downfall.
ENI has been operating in Algeria since 1981 and produced 88,000 boe per day last year, helping it to build a strong relationship with the Algerian government.
For First Calgary, its five-year history as a publicly traded company has been typical of the roller-coaster ride of so many small Canadian firms which have latched on to substantial resources in politically volatile regions.
Next on the asset-disposal list could be Calgary-based Verenex Energy, which said Sept. 8 it is exploring “strategic alternatives” after testing a number of wells drilled in Libya, which it estimates could produce 100,000 barrels per day.
Verenex, whose shares have fluctuated from C$8.99 to C$17.43 over the past two months, has brought its assets close to development, backed by permits and established resources — something First Calgary fell short of achieving.
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