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Providing coverage of Alaska and northern Canada's oil and gas industry
March 2010

Vol. 15, No. 12 Week of March 21, 2010

Gearing up for Canadian action

Gary Park

For Petroleum News

The Royal Bank of Scotland, majority owned by the British government following a massive bailout, has signaled a further relaxation of financial markets by opening an oil and gas advisory office in Calgary.

The bank’s Canadian executive Larry Maloney said the decision mirrors confidence in the Canadian petroleum industry.

Because of changes among other banks that had been in the market, RBS felt there was an opening, he said.

RBS, through its Houston advisory, conducts reserves-based lending, mergers and acquisitions and risk management services for large- and mid-cap companies, but that mandate is being expanded into the junior sector.

Other Calgary bankers agree capital demands are growing in response to an abundance of oil and gas properties on the market as companies such as Suncor Energy and Talisman Energy unload non-core assets.

Pension funds and private equity firms are also making an appearance to build their oil and gas portfolios.

More equity funding expected

Observers expect the latest royalty changes by the Alberta government could spur a fresh round of equity funding to raise growth capital and prepare for anticipated acquisition opportunities.

Brian Lidsky, managing director of Houston-based PLS, said Canada has three of the five largest packages available in North America, including Suncor’s plans to divest C$4 billion worth of assets following its takeover of Petro-Canada, while Talisman and Nexen are seeking buyers for significant production so that they can focus on unconventional shales.

EnCana and Cenovus are also preparing to sell non-core gas reserves and production and oil sands startup OPTI Canada could fetch C$2.5 billion in an outright sale.

Alan Tambosso, with Sayer Energy Advisors, said that despite the properties on the market, the demand is for unconventional prospects rather than just conventional gas.

He said the “assets out there are very large and they’re conventional gas. The big question is who will buy them.”

Sayer estimates deals last year fetched an average C$1.48 per thousand cubic feet, a sharp drop from C$2.48 in 2008, with production prices averaging C$37,000 per flowing barrel.

Tambosso said there could be an increase in absolute value this year, but doubts prices will rise in a flooded market.






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