Oil-sands firm plans HK listing
Sunshine Oilsands, a developer of oil-sands energy projects in Canada backed by two mainland financial institutions, is aiming to raise up to US$700 million from a listing this month in Hong Kong.
The company planned to issue 639 million new shares, a quarter of its enlarged share capital after the listing, two people familiar with its listing plan said, but added the number of shares had not been finalised.
It plans to raise US$600 million, but if demand exceeds the shares on offer, it may raise another US$100 million with 15 per cent more shares.
The firm had been meeting select fund managers in 'pre-marketing' of its shares offer this week and was expected to launch a marketing roadshow for institutional investors on Monday, the sources said. The share price will be set on February 14 and the stock will be listed a week after that.
Bank of China International, Deutsche Bank and Morgan Stanley are joint sponsors and global co-ordinators of the transaction. Sunshine did not respond to queries while its sponsors declined to comment.
Sunshine raised US$230 million last March by selling shares to China Life Insurance (Overseas), the Hong Kong arm of state-owned China Life Insurance (Group); Bank of China Group Investment, the Hong Kong investment management unit of Bank of China; and the Cross-Strait Common Development Fund.
Sunshine was set up five years ago. According to its website, it owns 100 per cent of 464,531 hectares of oil-sands leases, or 7 per cent of the total oil-sands leases granted in the Athabasca region of northern Alberta.
Based on an evaluation two months ago, it is estimated to have 419 million barrels of proved and probable reserves. If 3.1 billion barrels of contingent resources - projects not currently commercially or technically viable - are included, the reserves and estimated resources total 3.52 billion barrels.
Going by Sunshine's targeted firm value of US$2.4 billion, this amounts to US$0.68 per barrel on reserves and resources. According to a Bank of China International research report, six acquisitions of non-production oil-sands assets in Canada in recent years were at an average value of C$0.72 per barrel on reserves and resources. Production is projected to rise from 1,800 barrels a day this year to 200,000 barrels a day in 2024.
BOCI has forecast a net profit of C$11.3 million (HK$87.51 million) in 2014, compared with a loss of C$20.6 million next year and a loss of C$76.8 million last year.
Oil sand is a thick, tar-like form of petroleum that needs to be heated by steam to extract the oil, and it costs much more than conventional crude to produce. Large-scale delivery will depend on a planned pipeline.
The proposed C$5.5 billion, 1,177 kilometre Northern Gateway pipeline linking oil-sand fields in Alberta to the west coast for exports to the Pacific Rim is under the regulatory approval process. Aborigines and environmentalists have voiced opposition to the pipeline because of oil-spill fears. A person close to Sunshine said it would deliver oil via trucks to the coast until the pipeline was built.
The number of proved and provable barrels of oil in Sunshine Oilsands reserve in northern Alberta, Canada