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Athabasca, PetroChina agree on path to closing Dover oilsands sale

CALGARY - Athabasca Oil Corp. says a closing date has been set for the long-awaited sale of its Dover oilsands stake to a unit of PetroChina, but the Calgary-based company isn't saying publicly when that will be or what's behind the delay.

Athabasca (TSX:ATH) had been aiming to receive $1.23-billion in proceeds from the sale by mid-year so it could turn its focus toward developing its holdings in Alberta's promising Duvernay sale.

"Both parties are jointly working towards the closing of the transaction and we have a mutually understood path to closing, including targeted timelines," CEO Sveinung Svarte told analysts and reporters on a conference call.

"We had hoped this would have been done by now, but sometimes things take longer than anticipated."

Svarte would only say that the deal would be done in a "reasonable timeframe" and that it only expects to deal with "normal closing events" from now on.

He said he wouldn't get more specific about the timing, as he's "basically fed up" with the pressure of "meeting certain deadlines here."

Uncertainty over the Dover sale has weighed on Athabasca's share price. But around mid-day Wednesday, the stock was up about four per cent at $6.34.

A 2009 joint-venture deal between Athabasca and PetroChina covering the MacKay River and Dover projects included an exit strategy of sorts for the Canadian company. In 2012, PetroChina took full control of the MacKay River project without any significant glitches.

But the process for Dover — in which PetroChina would buy Athabasca's 40 per cent stake in the project, giving the Chinese company complete ownership — has been anything but easy.

Concerns over the transaction have mounted amid Chinese reports that a handful of PetroChina officials with ties to Canada are under investigation.

"We don't know exactly the impact of that on this case," Svarte said, adding the company has not been contacted by Chinese officials with respect to their probe.

"This is not a concern for Athabasca. We conduct our business at the highest ethical standards and we adhere to all applicable laws."

Months before the most recent speculation, regulatory approval for Dover — a prerequisite for the sale to PetroChina — had been held up by a legal challenge from a nearby First Nation.

Also Wednesday, Athabasca posted a bigger loss in the second quarter as it set aside $49 million to settle claims made by Phoenix Energy Holdings Ltd., PetroChina's Canadian subsidiary.

The settlement relates to the cost of abandoning old oil and gas wells at Dover and MacKay River, so that the oilsands resource there can be developed using steam-assisted gravity drainage technology.

Svarte said he doesn't believe those negotiations have held up the Dover sale, but that there were "various other reasons" why more time was needed.

For the second quarter, Athabasca's loss amounted to $56.8 million, or 14 cents per share, and compared with $30 million, or seven cents per share a year earlier.

The company said it produced an average of 5,767 barrels of oil equivalent per day during the quarter with 52 per cent liquids, in line with guidance.

Athabasca has about 350,000 net acres of Duvernay land. Eight horizontal wells have been drilled into the formation, with half of those producing at the end of the first quarter.

The company is still looking for a joint-venture partner to help develop the Duvernay, but the Dover matter must be settled before "concrete work" on that process can continue, Svarte said.

Athabasca's 2014 capital budget remains at $527 million, Athabasca said, adding its plans will be updated once it receives the proceeds from Dover.

Follow @LaurenKrugel on Twitter

The Canadian Press


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