French firm snags oil sands project
The Globe and Mail: French firm snags oil sands project
Total's purchase of Deer Creek seen as vote of confidence
By DAVE EBNER
Wednesday, August 3, 2005
CALGARY -- Total SA of France -- among the world's biggest oil companies -- is paying $1.35-billion for a major oil sands project in Alberta, yet another endorsement for the massive crude deposit that is drawing ever-increasing international interest.
"Total can go anywhere they want -- Russia, Venezuela, offshore West Africa -- and they've chosen to go after the oil sands of Canada," said Raymond James analyst John Mawdsley. "There's a good reason for that: political stability, huge resource base, known technology. It's something, frankly, that no other country in the world has to offer."
Total is buying upstart Deer Creek Energy Ltd. and its Joslyn project, which could be producing large amounts of oil by 2010.
"It speaks to a huge vote of confidence in the long-term potential of the oil sands as a sustainable, dependable source of oil to global markets," said Ari Levy, a vice-president at TD Asset Management Inc
A cluster of companies have made significant purchases this year in northern Alberta's oil sands.
They include a trio of deals by state-controlled firms from China. Total's deal yesterday to buy a project that could cost $10-billion or more to develop follows a July announcement from Exxon Mobil Corp. of Texas for a $6.5-billion development.
The international interest this year comes alongside equally large domestic moves, including a multibillion-dollar effort by Canadian Natural Resources Ltd.
The Deer Creek deal sent waves of bullish sentiment through the Canadian oil business yesterday, in particular driving up stocks of small firms focused on the oil sands, such as UTS Energy Corp. and Opti Canada Inc.
Large companies such as Total are changing their view of the oil sands because they are raising their expectations for the long-term price of oil, said Glen Schmidt, president and chief executive officer of Deer Creek.
That's a big shift from just a couple years ago when the oil sands were considered a fringe resource, too expensive to develop.
"Yesterday's yardstick is a pretty poor instrument to measure what's happening today and in the future," Mr. Schmidt said.
The contrast between Total and Deer Creek is stark. Total is the fourth-biggest publicly traded energy company in the world with operations in more than 130 countries, whereas Deer Creek went public only one year ago and pinned its future on its oil sands dreams.
"The French just planted a very big flag up north of Fort McMurray," analyst Steven Paget of FirstEnergy Capital Corp. said in a note yesterday.
Total is offering Deer Creek investors $25 a share in cash, almost 40 per cent more than the stock's close on Friday of $18, and the deal is expected to close next month. Deer Creek closed yesterday at $24.95, up $6.95.
Total's foray comes just one day after Kinder Morgan Inc., a U.S. pipeline company, offered $3.1-billion (U.S.) to buy Vancouver-based Terasen Inc., which is hoping to expand its pipeline network to carry additional oil sands production.
Patrick Daniel, CEO of Terasen rival Enbridge Inc., said the arrival of a big U.S. pipeline company in the oil sands is highly significant.
"Probably the single most important message that I read here is a really strong and ever-increasing interest in the oil sands," Mr. Daniel said.
Each international endorsement is important, industry insiders say. The U.S. Energy Information Administration recognizes the oil sands as the world's second-largest oil reserve, ranking only behind Saudi Arabia, but other widely followed arbiters, such as the BP Statistical Review of World Energy, have not made the same conclusion.
Magnetic north
France's Total SA is the latest big-name international energy company making billion-dollar bets on the oil sands, joining an increasing rush of players drawn in by the region's massive resource, Canada's political stability and lofty oil prices. Add it up and it "creates a pretty attractive magnet to international companies," says Glen Schmidt, CEO of Deer Creek.
France
Total SA could spend more than $10-billion developing Deer Creek's Joslyn project, which would include an upgrader to process raw bitumen.
Primary plans include mining 200,000 barrels of bitumen a day with production starting in 2010.
Total mining production of two billion barrels over three decades is predicted.
Total takes 84-per-cent stake in Joslyn; Enerplus Resources Fund owns the rest.
United States
Imperial Oil Ltd., majority owned by Exxon Mobil Corp. of Irving, Tex., filed regulatory documents in July for a 300,000-barrel-a-day mining project.
Dubbed Kearl Lake, it could cost as much as $6.5-billionand be in full operation in 2018.
Kinder Morgan Inc. on Monday unveiled a $3.1-billion (U.S.) plan to buy Vancouver's Terasen Inc., giving Kinder a foothold in oil sands pipeline infrastructure.
"The oil sands play is going to get larger and larger," CEO Richard Kinder says.
China
On April 12, China National Offshore Oil Corp. makes China's first oil sands move, putting down $150-million (Canadian) for a one-sixth stake in MEG Energy Corp.
Two days later, PetroChina International Co. Ltd. agrees to support half of Gateway pipeline, a $2.5-billion project proposed by Enbridge Inc. to move oil sands crude to the West Coast for export.
China Petroleum & Chemical Corp. (Sinopec) in late May paid $105-million for a 40-per-cent stake in the Northern Lights project.
Total's purchase of Deer Creek seen as vote of confidence
By DAVE EBNER
Wednesday, August 3, 2005
CALGARY -- Total SA of France -- among the world's biggest oil companies -- is paying $1.35-billion for a major oil sands project in Alberta, yet another endorsement for the massive crude deposit that is drawing ever-increasing international interest.
"Total can go anywhere they want -- Russia, Venezuela, offshore West Africa -- and they've chosen to go after the oil sands of Canada," said Raymond James analyst John Mawdsley. "There's a good reason for that: political stability, huge resource base, known technology. It's something, frankly, that no other country in the world has to offer."
Total is buying upstart Deer Creek Energy Ltd. and its Joslyn project, which could be producing large amounts of oil by 2010.
"It speaks to a huge vote of confidence in the long-term potential of the oil sands as a sustainable, dependable source of oil to global markets," said Ari Levy, a vice-president at TD Asset Management Inc
A cluster of companies have made significant purchases this year in northern Alberta's oil sands.
They include a trio of deals by state-controlled firms from China. Total's deal yesterday to buy a project that could cost $10-billion or more to develop follows a July announcement from Exxon Mobil Corp. of Texas for a $6.5-billion development.
The international interest this year comes alongside equally large domestic moves, including a multibillion-dollar effort by Canadian Natural Resources Ltd.
The Deer Creek deal sent waves of bullish sentiment through the Canadian oil business yesterday, in particular driving up stocks of small firms focused on the oil sands, such as UTS Energy Corp. and Opti Canada Inc.
Large companies such as Total are changing their view of the oil sands because they are raising their expectations for the long-term price of oil, said Glen Schmidt, president and chief executive officer of Deer Creek.
That's a big shift from just a couple years ago when the oil sands were considered a fringe resource, too expensive to develop.
"Yesterday's yardstick is a pretty poor instrument to measure what's happening today and in the future," Mr. Schmidt said.
The contrast between Total and Deer Creek is stark. Total is the fourth-biggest publicly traded energy company in the world with operations in more than 130 countries, whereas Deer Creek went public only one year ago and pinned its future on its oil sands dreams.
"The French just planted a very big flag up north of Fort McMurray," analyst Steven Paget of FirstEnergy Capital Corp. said in a note yesterday.
Total is offering Deer Creek investors $25 a share in cash, almost 40 per cent more than the stock's close on Friday of $18, and the deal is expected to close next month. Deer Creek closed yesterday at $24.95, up $6.95.
Total's foray comes just one day after Kinder Morgan Inc., a U.S. pipeline company, offered $3.1-billion (U.S.) to buy Vancouver-based Terasen Inc., which is hoping to expand its pipeline network to carry additional oil sands production.
Patrick Daniel, CEO of Terasen rival Enbridge Inc., said the arrival of a big U.S. pipeline company in the oil sands is highly significant.
"Probably the single most important message that I read here is a really strong and ever-increasing interest in the oil sands," Mr. Daniel said.
Each international endorsement is important, industry insiders say. The U.S. Energy Information Administration recognizes the oil sands as the world's second-largest oil reserve, ranking only behind Saudi Arabia, but other widely followed arbiters, such as the BP Statistical Review of World Energy, have not made the same conclusion.
Magnetic north
France's Total SA is the latest big-name international energy company making billion-dollar bets on the oil sands, joining an increasing rush of players drawn in by the region's massive resource, Canada's political stability and lofty oil prices. Add it up and it "creates a pretty attractive magnet to international companies," says Glen Schmidt, CEO of Deer Creek.
France
Total SA could spend more than $10-billion developing Deer Creek's Joslyn project, which would include an upgrader to process raw bitumen.
Primary plans include mining 200,000 barrels of bitumen a day with production starting in 2010.
Total mining production of two billion barrels over three decades is predicted.
Total takes 84-per-cent stake in Joslyn; Enerplus Resources Fund owns the rest.
United States
Imperial Oil Ltd., majority owned by Exxon Mobil Corp. of Irving, Tex., filed regulatory documents in July for a 300,000-barrel-a-day mining project.
Dubbed Kearl Lake, it could cost as much as $6.5-billionand be in full operation in 2018.
Kinder Morgan Inc. on Monday unveiled a $3.1-billion (U.S.) plan to buy Vancouver's Terasen Inc., giving Kinder a foothold in oil sands pipeline infrastructure.
"The oil sands play is going to get larger and larger," CEO Richard Kinder says.
China
On April 12, China National Offshore Oil Corp. makes China's first oil sands move, putting down $150-million (Canadian) for a one-sixth stake in MEG Energy Corp.
Two days later, PetroChina International Co. Ltd. agrees to support half of Gateway pipeline, a $2.5-billion project proposed by Enbridge Inc. to move oil sands crude to the West Coast for export.
China Petroleum & Chemical Corp. (Sinopec) in late May paid $105-million for a 40-per-cent stake in the Northern Lights project.
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