Cnooc Ltd, China’s biggest offshore oil producer, agreed to acquire bankrupt Opti Canada Inc for US$2.1 billion in cash and debt to increase oil sands assets.
Beijing-based Cnooc will pay US$34 million in cash for all of Opti Canada’s shares, US$1.18 billion for some notes and assume US$825 million of debt, according to Wednesday’s statement. The Calgary-based oil producer had filed for bankruptcy protection as it faced a shortage of cash to fund its oil-sands operations.
Chinese companies, including China Petrochemical Corp, have bought Canadian energy assets as they search for new resources to meet demand in the world’s biggest energy consuming nation. Cnooc paid C$150 million (US$158 million) in 2005 for a stake in MEG Energy Corp to gain access to oil sands reserves and to expertise that may help tap such deposits in China.
“It’s more a strategic play,” Simon Powell, an analyst with CLSA Ltd in Hong Kong, said by telephone Wednesday. “Cnooc wants to have some investments in oil sands. They want some oil sands technology and some oil sands capability and skills and this acquisition will give it to them.”
Opti Canada’s main asset is its 35-per cent stake in the Long Lake project operated by Nexen Inc and it has investments in three other project areas located in the Athabasca region of north-eastern Alberta, according to the statement.
“The transaction strengthens our Canadian presence in the oil sands business,” Yang Hua, Cnooc’s chief executive officer, was cited as saying in the statement. “We believe that upside potential of the assets will facilitate local energy supply and our production growth in the long term.”
Oil sands are deposits of bitumen, an extra-heavy oil that must be treated for use in refineries to produce gasoline and diesel fuels.