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Canadian government poised to unload Hibernia, Petro-Canada
Gary Park
The Canadian government is down to its last two equity stakes in the petroleum industry — but one is about to topple and the other is wobbling.
After ignoring years of private sector pleas, the government has hired a financial adviser to help it market an 8.5 percent share of the C$5.8 billion Hibernia offshore oilfield.
Simultaneously, though less publicly, the government is also involved in informal talks to unload its final 18 per cent interest in Petro-Canada, a sale that could raise C$1.2 billion for federal coffers.
Hibernia could fetch more than C$400 million Wilf Gobert, research director at Peters & Co. in Calgary, thinks the Hibernia interest (controlled by federally-owned Canada Development Investment Corp.).could fetched more than the anticipated C$400 million if reserves in nearby fields are taken into account.
The three largest Hibernia players — Mobil Oil Canada with 33 percent, Chevron Canada Resources with 27 percent and Petro-Canada with 20 percent — are seen as certain bidders.
Of the outsiders, Husky Oil gets top rating because of its interests in two Hibernia neighbors, 75 percent in Whiterose and 17.5 percent in Terra Nova, coupled with news that the privately-controlled company could itself be spun off within two years.
Government can reap fair return Having formed Petro-Canada in 1975 as a bulwark against U.S. control of Canada’s oilpatch, the government sold shares in 1991 for C$13 and in 1995 for C$14.63. Now that those shares have settled around C$21, analysts think the government can reap a fair return without appearing greedy.
Petro-Canada spokesman Rob Andras said the government has “generally indicated it would be prepared to bring its shares to the market if conditions are right.” He said the some of the same factors influencing the Hibernia decision also apply to Petro-Canada, with the company’s stock “highly levered” to the performance of its East Coast offshore assets.
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