Athabasca Oil Sands sells remainder of interest in MacKay River oil sands project to PetroChina for C$680M; PetroChina to be full owner of project
Athabasca Oil Sands Corp. has exercised its option to divest its 40% interest in the MacKay River oil sands project to Cretaceous Oilsands Holdings Limited, a wholly owned subsidiary of PetroChina International Investment Limited, for C$680 million (US$672 million) in cash. (Earlier post.) As a result, PetroChina will have full ownership of the project, which received full regulatory approval from the Alberta Energy Resources Conservation Board and Alberta Environment and Water in December. (Earlier post.)
The sale is subject to closing adjustments including Athabasca’s repayment of two loans provided by Cretaceous.
The 10 February 2010 Put/Call Option Agreement between Cretaceous and Athabasca granted this option to trigger the sale of Athabasca’s 40% interest in the MacKay River project. As a result of the sale of its MacKay River interest, Athabasca’s 2012 capital budget will be reduced by approximately $190 million.
The Board of Directors of Athabasca said it decided to proceed with this divestiture because it believes the long-term prospects of the company are enhanced by deploying its capital and resources into its other development projects.
Since creating the joint venture with Cretaceous in February, 2010 and until our exercise of the put option, Athabasca has grown and diversified. We added approximately three billion barrels of contingent resource (best estimate) through successful drilling and acquisitions, reaching approximately 10 billion barrels of contingent resources (best estimate).
We grew the resource base of the Hangingstone asset area, which the company estimates now has the potential to produce more than 80,000 barrels of bitumen per day. As a result, we accelerated the timing of development for this project and first production is expected in 2014.
We have also acquired more than 1.7 million acres of promising light oil and liquids-rich natural gas properties. The company is very pleased with the results of our 2011 light oil drilling and completions program and we are targeting a production rate of 8,000 - 10,000 barrels of oil equivalent per day by the end of 2012.—Sveinung Svarte, president and CEO
Bill Gallacher, chair of the Athabasca board said that the company’s strategy is to ultimately achieve approximately 50% of its production from the company’s oil sands division and the balance from the light oil division. The company will use the proceeds from the sale to implement this strategy.