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First Calgary ends talks, goes it alone
A bumpy ride by First Calgary Petroleum has taken a sudden nosedive with the Canadian junior breaking off talks with Repsol on a possible alliance to develop its Algerian gas discoveries, angering many of its shareholders in the process.
After seven months of pondering its strategic alternatives and seeking a possible buyer for its assets, First Calgary has now decided to go it alone in an effort to add production to its role as a pure explorer.
President and chief executive officer Rick Anderson told shareholders June 16 by pushing ahead with plans for US$2.6 billion worth of development to produce its oil and gas reserves along with Algeria’s state-owned Sonatrach, aiming for 250,000 barrels of oil equivalent per day.
Anderson said oil could be flowing within two years and gas within three years. Repsol refused to submit clear plan He attributed the breakdown with Repsol to a refusal by the privately-owned Spanish oil and gas giant to submit a clear development plan.
“When you hand over your asset to someone else and you become the non-operator, you want to have their hands tied so tight you know what they’re doing every two hours of the day,” he said.
First Calgary has drilled 12 successful, but widely-separated wells in recent years and claims to have found a net 2.1 trillion cubic feet equivalent of proved, probable and possible reserves, while projecting that possible reserves could be 13 times greater than current proven reserves.
Anderson, in its first face-to-face meeting with shareholders June 16, conceded that he was premature in putting the company up for sale, “given the early stage of our development.” Lehman paid nothing He came under fire from some shareholders, frustrated by a 65 percent dive in their holdings this year.
They wanted to know why investment bank Lehman Brothers had been hired to handle the sale.
Anderson was loudly applauded by the crowded meeting when he said Lehman had been paid nothing for the failed attempt, adding he would like to put Lehman in a “headlock and rap them a couple of times … but I don’t blame Lehman.”
Among investors and analysts the response was mixed.
Ian Henderson, a J.P. Morgan money manager, said he is 100 percent certain First Calgary has made an “absolutely exceptional discovery,” while Darius Parsi, an adviser with FM Fund Management, said the company has “simply not delivered.”
—Gary Park
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