Japanese oil producer eyes Canada divestment as M&A picks up

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Japanese state-backed oil producer Japan Petroleum Exploration Co (Japex) is contemplating a sale amongst different choices for its Hangingston oil sands undertaking in Canada, an organization spokesperson mentioned on Friday.

Japex is in search of a purchaser for its 75% stake within the Hangingstone oil sands facility in Canada, two sources with direct data of the matter beforehand informed Reuters.

A number of international oil majors have rushed to promote Canadian oil sands belongings over the previous 4 years over considerations starting from excessive manufacturing prices and emissions to shortage of capital.

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Japex unit Japan Canada Oil Sands Ltd (JACOS) is majority proprietor of Hangingstone, with Chinese language state-owned oil large CNOOC holding the remaining 25%.

One supply mentioned JACOS might fetch greater than C$200 million ($160 million) from the sale, which might appeal to notable bids because it has ample oil reserves that may profit from recent funding.

“We’re contemplating varied measures together with the sale of our stake and reducing manufacturing prices to enhance profitability of the undertaking, however nothing has been determined,” Yuki Goto, a spokesperson at Japex, informed Reuters by cellphone, including the transfer is a part of its portfolio evaluation.

JACOS, which didn’t reply to Reuters requests for remark, is working with an advisor on the sale, the sources mentioned, requesting anonymity whereas discussing confidential talks.

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They cautioned {that a} remaining resolution on the sale has not but been reached, and JACOS might nonetheless retain it.

The corporate additionally owns pursuits in undeveloped leases in Canada.

Hangingstone, a steam-assisted oil manufacturing website that started output in 2017, averaged 23,000 barrels per day (bpd) within the first 4 months of this yr, based on the Alberta Vitality Regulator.

General deal exercise involving North American power firms has accelerated as crude oil costs have surged after crashing final yr throughout the pandemic.

Calgary-based ARC Assets, which in March purchased rival Seven Generations Vitality in a C$2.7-billion deal, has bought its Alberta’s Pembina Cardium belongings to privately held Ricochet Oil Corp for round C$100 million, 4 sources aware of that transaction informed Reuters.

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The deal permits it to concentrate on turning into a pure-play Montney producer, one of many sources mentioned.

ARC declined to remark and Ricochet didn’t reply.

Individually, Schlumberger NV has begun a proper course of to promote its Canadian three way partnership with Torxen Vitality, a number of sources aware of the matter informed Reuters. Chief Government Olivier Le Peuch said the aim in April to exit most oil producing belongings globally.

The three way partnership had spent over $1 billion to purchase oil and pure gasoline belongings within the Palliser block in Alberta from Cenovus Vitality in October 2017.

A Schlumberger spokesperson mentioned the corporate is repeatedly its portfolio.

($1 = 1.2524 Canadian {dollars}) (Reporting by Shariq Khan in Bengaluru and Rod Nickel in Winnipeg, Manitoba; Extra reporting by Yuka Obayashi in Tokyo; Modifying by Sonya Hepinstall and David Gregorio)