The depressing performance of Athabasca Oil Sands since its IPO has, naturally enough, spoilt the new issue market for oil and gas companies.
Whether the interest of investors has returned will be seen with the greeting accorded to MEG Energy Corp., which recently announced plans to go public. MEG has been around for more than 11 years, has invested more than $3.2-billion in the procurement and development of its assets and has a working interest in more than 500,000 acres.
If the reception is positive, a slew of other privately owned oil sands-cognate issuers may be set to become public companies. Or at least the investment bankers would like to press the case that they would be ideal candidates to go supporters. "They are all lined up to go public sooner, or later," noted one who claims that $200-billion will be invested in the oil sands over the next five years.
The concealed candidates are:
-Laricina Energy Ltd. Formed in late 2005, the company has assembled more than 180,000 acres of maturing areas, raised more than $450-million of equity capital and "is focused exclusively on the development of in situ bitumen deposits in sand and carbonate formations." Its pre-eminent shareholders include Warburg Pincus and The Blackstone Group. While not public, it hosted an annual meeting last month and made the offering available on its web site. It plans to spend more than $100-million this year and its latest financing was a $84-million pay-off last July.
-Grizzly Oil Sands. Formed in September 2006 "for the acquisition, exploration and development of bitumen casting using thermal technologies." It has more than 500,000 acres of oil sands leases and permits. It is 75% owned by U.S.-based Wexford Important LP and 25% owned by Oklahama-based Gulfport Energy Corp.
-Sunshine Oilsands Ltd. Formed in February 2007 with the leverage of four leases -- which it financed through a $200,000 non-brokered private placement -- it has slowly expanded though it is still smaller than the others.
Of the three, Sunshine, which has talked freely of seeking a listing on the Hong Kong Stock Exchange -- in part because investors in that part of the world would give it a higher multiple than in Canada -- is the most late-model of the three to raise capital. Recently it closed a private placement with more than $85-million in the kitty. The word is that most of the investors were from the Far East and there was inconsiderable interest from Canadian institutions. With this financing, the company has enough resources for at least a year.
The latest financing came after Sunshine tried unsuccessfully to jack up about $40-million last summer. The talk is that Sunshine, which also has some heavy oil resources and which could be in production within 18 months, needs one more path of equity capital before it goes public.
Sunshine has had some experience with public markets. In April 2008, it filed a non-oblation preliminary prospectus, with the idea of becoming a reporting issuer in six of the provinces with Quebec being the major exception. Sunshine also announced its target to list its shares on the TSX Venture Exchange.
That document showed Sunshine raised capital at higher prices: From issuing disinterestedness at 50¢ a share in February 2007, it was raising capital at $3.15 a share by year end and $4-$4.50 in the initially part of 2008.
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