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Osum handles financing in stride
Gary Park For Petroleum News
Undeterred by a shaky capital market outlook, privately owned Osum Oil Sands is pressing ahead with a succession of five projects it expects to see come onstream from 2015 to 2020 and produce a gross 390,000 barrels per day.
The bundle includes Saleski, the world’s first carbonate project using thermal horizontal well recovery processes to produce bitumen from Alberta’s Grosmont formation — a C$550 million project with Laricina Energy as operator and 60 percent owner.
Osum’s latest moves include filings with Alberta regulators to build, own and operate the Sepiko Kesik project designed to produce a peak 60,000 barrels per day from the Grosmont and Upper Ireton formations, using a combination of cycling steam stimulation and steam-assisted gravity drainage technologies.
The company said it plans to build the facility in two equal stages of 30,000 bpd that are expected to have operating lives of 45 years.
Osum has estimated the acreage holds 906 million barrels of bitumen as the best contingent resource capable of eventually supporting output of 100,000 bpd.
Approval to build Last fall, Osum received approval to build and operate its Taiga in-situ oil sands facility in the Cold lake area, aiming to recover a net 40,000 bpd, starting in 2016 and extending over 30 years and involving capital spending of about C$3 billion.
Taiga is a key element of Osum’s strategy of continuing to derisk its expanding portfolio, said Chief Executive Officer Steve Spence.
He said construction on the initial 12,500 bpd phase could start this year and achieve first output of 5,000 bpd by late 2015.
Spence told shareholders the Saleski pilot is successfully proving bitumen recovery, adding the company’s C$220 million share of the project is already fully funded.
In January, Osum said it had raised C$500 million from a syndicate of eight investors, including the Government of Singapore, Korea Investment Corp. and two unidentified German institutional investors.
However, Laricina has spread a cloud over the first phase of Saleski as it seeks C$330 million to cover its share of the costs.
Company President and Chief Executive Officer Glen Schmidt said capital markets “have an increased level of uncertainty and while our plans have been to consider public markets when both we and the markets are ready, we don’t see them likely available to the company within 2013.”
“In the interim, we would manage the financing choices we have selected in the past, which include private equity. We have not, up to this point, looked at debt ... we have sufficient runway to manage those choices,” he said.
Schmidt also said there is much Laricina must do to adapt to and prepare for 2013, citing the challenge of commodity prices, transportation differentials, government regulation and special-interest interventions.
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