First Calgary not on auction block – yet

Gary Park

First Calgary Petroleums denied British newspaper reports that it is up for sale, but confirmed it is weighing “strategic alternatives” — heightening speculation that it is close to being on the block. The little-known Calgary-based junior, whose market capitalization has soared more than 70-fold since 2000, said Oct. 19 that it has appointed a board committee to consider ways of developing its Algerian properties estimated to hold 1.2 billion barrels of oil equivalent of proved and probable reserves.

The Financial Times in London quoted First Calgary Chief Executive Officer Richard Anderson as saying his company was about to appoint bankers to advise on the best way to “maximize shareholder value,” including the possible full sale of First Calgary. Last month the Globe and Mail in Toronto reported Anderson as saying a sale was under consideration but wouldn’t be decided on until 2005.

He said First Calgary had been approached by Shell, Total and Norway’s Statoil and Norsk Hydro, all of them interested in the Algerian assets, but declined to say whether any of them had made a bid.

“We are sitting with a large company asset in a little company,” Anderson said, noting that First Calgary has no production. “We need to do what is best for shareholders.”

With stock exchange listings in London and Toronto, First Calgary has seen its market-cap soar from C$39 million four years ago to C$2.83 billion, fueled by its exploration successes that have tested at cumulative daily flow rates of 500 million cubic feet of gas and 40,000 barrels of oil — all that preceding an Oct. 19 announcement of another discovery well producing 214 million cubic feet per day and 9,863 bpd.

First Calgary also said it was issuing 10.15 million shares worth C$174 million to buy out an unnamed investor who holds rights to 5 percent of net profits from the company’s properties.