Abu Dhabi National Said to Be Chasing Canadian Deals
By Joe Carroll
March 30 (Bloomberg) -- Abu Dhabi National Energy Co., the Persian Gulf petroleum and power producer known as Taqa, is hunting for acquisitions in Canada’s tar sands, home of the world’s second-largest crude deposits outside Saudi Arabia, according to two people involved in the search.
Taqa is assessing multiple potential targets that extract crude from Canada’s oil-soaked bogs and river valleys, according to people who asked not to be identified because they weren’t authorized to make the information public.
Taqa Chief Executive Officer Peter Barker-Homek said this month he plans to spend at least $3 billion this year buying oil and power companies in Europe and North America. Canadian energy producers have lost as much as 94 percent of their market value in the past year as tumbling crude prices and the collapse of credit markets erased funding for oil-sands projects.
“The companies that could become targets for takeover are the smaller distressed ones that are going through bank reviews now from a credit perspective,” said Will Lee, an analyst at CIBC World Markets Inc. in Toronto.
State-controlled Taqa entered the Canadian oil and natural- gas industry in August 2007 with its $2 billion purchase of Northrock Resources from Pogo Producing Co., which is now part of Plains Exploration & Production Co. Taqa, based in Abu Dhabi, spent an additional $5 billion since then adding to its Canadian portfolio, including a takeover last year of Calgary-based PrimeWest Energy Trust.
Growing in Canada
Taqa spokeswoman Reem Al Midwahi declined to comment on possible Canadian acquisitions. The company is one of Canada’s top 12 oil and gas producers and plans to boost revenue there by C$20 billion ($16.1 billion) in the next four years, according to Taqa’s Web site.
The people involved in Taqa’s acquisition hunt declined to name any of the potential targets or to give a price range being considered.
An index of 45 Canadian petroleum producers tumbled 4.4 percent today after oil declined 7.5 percent on signs of deepening recessions in the world’s largest economies.
Oil-sands producers have been harder hit than other energy companies by the $95-a-barrel drop in oil prices from last year’s record because of the high cost of working in the sands, according to analysts at IHS Herold in Norwalk, Connecticut.
Shares Drop
Canadian energy producers tumbled 36 percent in the past year, compared with a 24 percent decline for their U.S. rivals. Crude futures plunged 64 percent from the all-time high of $147.27 in July 2008 as recessions around the world eroded fuel demand.
Paris-based Total SA, Europe’s third-largest oil company, on March 27 extended its C$617 million offer for oil-sands explorer UTS Energy Corp. to April 16 after UTS’s directors rejected the offer as “financially inadequate.”
UTS, a Calgary-based company that’s never pumped a barrel of crude and owns 20 percent of the Fort Hills oil-mining project in Alberta, more than doubled since Total’s Jan. 27 offer. UTS traded for C$1.70 a share on March 27, a 31 percent premium to Total’s bid.
Total’s UTS Bid
Total CEO Christophe de Margerie last week said he doesn’t want to increase his offer. The company plans to spend $10 billion to $15 billion over the next decade to develop oil-sands reserves near the Athabasca River in northern Alberta.
Petro-Canada, which owns a 60 percent stake in Fort Hills, agreed last week to be acquired by Suncor Energy Inc. in a C$19.3 billion deal that will create Canada’s biggest energy company. The transaction was the largest worldwide for the petroleum industry since January 2007, according to Bloomberg data.
Canada holds an estimated 179 billion barrels of untapped crude reserves, 97 percent of which are in four oil-sands deposits, the Canadian Association of Petroleum Producers said. Only Saudi Arabia has bigger reserves, with an estimated 264 billion barrels.
To contact the reporter on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net.
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