Time to choose a dance partner

Deer Creek Energy thinks it is sitting pretty as the “last man standing” among small independent oil sands players when it comes to land a major partner for its possible C$3.5 billion project.

Glen Schmidt, the company’s chief executive officer, said cash is not a problem for Deer Creek; the priority is finding a company with upgrading or mining skills to help it achieve 240,000 barrels per day of production.

“Our objective is to be capable of implementing all operations independently so that you’re not in a discussion with somebody because you have to do something,” he said.

Adding to Deer Creek’s leverage is the fact that most smaller oil sands companies have entered partnership arrangements in the last few months, with Petro-Canada taking a stake in UTS Energy and China’s CNOOC and Sinopec linking up with MEG Energy and Synenco, respectively.

“It’s left us in a good position,” Schmidt said.

The big change in recent years for companies such as Deer Creek is easy access to capital, now that the market is more willing to invest in oil sands leases.

He said the cost for partnership transactions has climbed significantly in the past four years.

Deer Creek plans to develop its two billion barrels of bitumen reserves through open-pit mining and steam injection.

It plans to add 10,000 bpd in early 2006 and add 15,000 bpd in further stages for the steam-assisted operation, while mining phases will add 50,000 bpd in four phases, starting in 2010.

Other equity financings this month include:

• OPTI Canada closing a private placement of C$185 million for the first phase of its Long Lake joint venture with Nexen – a 72,000 bpd start up in 2007.

• Oilsands Quest completed a C$4.4 million equity financing for its 2005 exploration program on 13 wholly-owned permits covering 850,000 acres in Saskatchewan to test its belief that bitumen trends extend beyond Alberta.

—Gary Park