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TORONTO AND CALGARY — Private and state-owned foreign suitors are eyeing the oil-sands properties of ConocoPhillips Co., the latest sign that ownership in the costly northern Alberta industry is shifting to offshore buyers with deeper pockets and a greater tolerance for risk.
According to people familiar with the sale process, Houston-based Conoco began accepting bids in July for up to half of its vast oil sands holding, and has entered into what one person described as a “very vigorous bidding process” with an unidentified group of top bidders. According to a number of media reports, one of the suitors is a consortium of three state-owned oil and gas companies from India: ONGC Videsh Ltd., Indian Oil Corp. and Oil India Ltd. One report from Dow Jones pegged the value of Conoco’s oil sands assets at $5-billion.
Conoco is one of the largest property owners in Alberta’s oil sands and its planned retreat highlights the growing challenges publicly traded companies face in extracting crude from tarry bitumen deposits with multibillion dollar mining, drilling and refining projects that are plagued with production setbacks and cost overruns.
Investors are increasingly applying pressure on oil companies to trim their investments in oil sands projects. With oil sands projects more and more expensive to build and operate, even the most entrenched Canadian companies are looking for an exit, or for partners to help carry the load.
Indian state-owned oil companies have been actively scouring Canada for an oil sands asset, showing up at a variety of recent auctions, according to investment bankers who declined to be identified.
But those sources said Indian buyers are often knocked out of the bidding because the slow pace of government decision-making has interfered with their ability to meet bidding deadlines.
Market sources said buyers from China, Europe and Southeast Asia have also expressed interest in Conoco’s properties, but it is unclear whether firms from these regions have formally submitted bids.
A Canadian spokeswoman for ConocoPhillips directed calls to her counterpart in Houston.
“We do not comment on market rumours,” Davy Kong said.
Athabasca Oil Corp. has made great strides to move away from the oil sands. It is negotiating with Kuwait Petroleum Corp. to sell the state-owned company its Hangingstone and Birch properties. Sources say negotiations also include Connacher Oil and Gas Ltd.’s neighbouring properties.
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