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Sunshine rises in Hong Kong
Five years after its incorporation with a C$30,000 nest egg provided by three founding members, Calgary-based Sunshine Oilsands Ltd. has started trading on the Hong Kong Stock Exchange with a stock value of C$1.7 billion.
The startup company now holds 115,000 acres, or about 7 percent of the total land area in the prime Athabasca oil sands region of northeastern Alberta, and an estimated 54.3 billion barrels of petroleum initially in place, of which 419 million barrels are listed as proved plus probable reserves.
But it wasn’t always an easy road to this point.
The founders started out in 1996 as a private company called Fern Energy, which was forced to return C$1.7 million to private investors after it failed to secure any leases at Alberta government auctions until February 2007.
Through private financings, Sunshine was able to spend C$71 million to acquire 152 leases last year and C$261 million on drilling, project planning and filing regulatory applications, with the goal of producing 200,000 barrels per day by 2024, mainly using steam-injection to extract raw bitumen.
Production 400 bpd The company’s current production is about 400 bpd and is targeted at about 1,800 bpd by the end of 2012.
It has also gained regulatory approval for a 10,000 bpd project and has applied for two more projects it hopes will grow to 50,000 bpd each by 2022.
A subsidiary of China’s state-owned Sinopec, which acquired 9 percent of the Syncrude Canada consortium for C$4.7 billion in 2010 and is a 50-50 partner with France’s Total in the Northern Lights project, has bought 8 percent of Sunshine’s shares.
But Strategy West oil sands consultant Bob Dunbar has cautioned that variations in the quality of reservoirs pose challenges for newcomers, while the rising costs of labor and materials mean there is no guarantee that developments will proceed to completion. However, he said Asian money is providing a safety net for capital costs.
Rick Pawluk, a partner with the law firm of McCarthy Tetrault, which helped Sunshine with its offering, said he would not be surprised to see other Canadian companies go public in Hong Kong.
—Gary Park
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