Oil producer Sunshine Oilsands seeks C$300m to fund projects

Sunshine Oilsands looks to banks for more loans to finance the building of facilities in Canada

PUBLISHED : Thursday, 01 November, 2012, 12:00am
UPDATED : Thursday, 01 November, 2012, 4:48am


Canada's Sunshine Oilsands, 29 per cent owned by Chinese state-backed firms, plans to raise between C$300 million (HK$2.33 billion) and C$350 million by seeking more bank loans to fund the development of its second oil sands production project in northern Alberta.

The company earlier this month completed a C$200 million syndicated loan from international banks to finance the construction of facilities to exploit oil sands at its West Ells project and early-stage development of its Thickwood and Legend Lake projects.

West Ells is located 100 kilometres northwest of Fort McMurray in northern Alberta province in western Canada.

"We expect to raise the additional term debt as early as the first quarter of next year, which should be sufficient to fund completion of our Thickwood project," Sunshine's vice-president of corporate operations, David Sealock, told the South China Morning Post.

Sealock said the company, which is listed in Hong Kong, aimed to also list in Toronto by next month without raising funds.

West Ells, which started construction in June, is expected to start production in the middle of next year with an initial output capacity of 10,000 barrels a day, expandable to 100,000 barrels.

Including nearby Thickwood and Legend Lake, the three projects are targeted to reach daily output capacity of 200,000 barrels by 2017.

Under this expansion time frame, the Calgary-based firm aims to maintain a net debt-asset ratio of 25 to 30 per cent and source one-third of its funding needs from each of operating cash flows, bank loans and other sources, assuming crude oil prices average US$90 a barrel in the next five years, Sealock said.

In the long term, the company aims to expand daily output capacity to one million barrels, but much of this will only go ahead if economical production of non-commercial resources is proven.

Sunshine is 29 per cent owned by sovereign fund investor China Investment Corp, oil major China Petroleum & Chemical (Sinopec) and the Hong Kong asset management arms of China Life Insurance and Bank of China.

Sunshine is in talks with Sinopec to co-invest in Canadian oil sands projects.

Mainland oil majors have poured billions of dollars into Alberta's oil sands projects to secure future oil supply. Oil sands are deposits of an unconventional type of crude oil that is more expensive than conventional oil to produce and process.