Teck ready to dig deeper into oil sands

Teck Cominco, the Canadian mining giant, is not content to make only one foray into the oil sands sector.

Chief Executive Officer Don Lindsay said other opportunities are being evaluated after the Vancouver-based company paid C$475 million for a 15 percent interest in the Fort Hills project owned by Petro-Canada and UTS Energy.

Teck is expected to end 2005 with about C$2 billion of available cash on its books.

Lindsay told an investment conference that the Fort Hills move in early September came after Teck was approached by five oil sands players interested in its mining expertise.

He said his company will proceed carefully with Fort Hills to “set the right tone because we do want to bring a mining approach to these large projects.”

Teck faced some adverse reaction from analysts, who thought it paid too much for a small stake in Fort Hills, given that Petro-Canada paid C$900 million for 60 percent.

Effectively, UTS acquired Fort Hills’ estimated recoverable reserves for 6 cents a barrel; Petro-Canada paid 18 cents a barrel; and Teck paid $1.13.

As the first mining company to enter the oil sands sector, Teck had attempted to land a larger piece, but was unable to come to terms with the joint venture partners.

“It will be the core for us building an oil sands division as opposed to just investing in one project,” Lindsay said.

—Gary Park