CNOOC to acquire OPTI Canada for $2.1 billion

By OGJ editors
HOUSTON, July 20
– A unit of CNOOC Ltd. will pay $2.1 billion for Canadian oil sands producer OPTI Canada Inc., Calgary, which filed on July 13 for creditor protection under Canada’s Companies’ Creditors Arrangement Act.

OPTI has a 35% working interest in Long Lake and three other oil sands project areas in the Athabasca region of northeastern Alberta. The Long Lake project includes steam assisted gravity drainage operation that began in 2008 and an upgrader that started up in 2009 (OGJ, Aug. 11, 2008, p. 43).

OPTI’s working interest share, before royalties, of raw bitumen on its oil sands leases is estimated to be 195 million bbl of proved reserves, 534 million bbl of probable reserves, 1.1 billion bbl of contingent resources, and 335 million bbl of prospective resources. These volumes are estimated to be sufficient to support 430,000 b/d gross, including 150,000 b/d net to OPTI, of bitumen production.

Nexen Inc., Calgary, operates Long Lake with 65% interest. The Long Lake SAGD project is expected to have throughput of 72,000 b/d of bitumen at full production. It is anticipated that the Long Lake upgrader will ultimately produce 58,500 b/d of products, mainly 39° gravity premium sweet crude. Recent output has been 28,300 b/d.

The proposed transaction must be approved by the second lien noteholders at a special meeting expected to be held in September 2011. Noteholders representing 55.2% of the principal amount of the second lien notes have executed support agreements pursuant to which, among other things, they have agreed to vote in favor of the transaction.

The proposed transaction is also subject to certain terms and conditions, including, among other things, applicable government and regulatory approvals by the relevant authorities in Canada and the People’s Republic of China, and Canadian court approval. The transaction is expected to be completed in the fourth quarter of 2011.

Upon completion, OPTI will become an indirect wholly-owned subsidiary of CNOOC, and all of the second lien notes will be transferred or assigned, directly or indirectly, to a subsidiary of the company. All existing options, warrants, and other rights to purchase OPTI shares will be canceled.

OPTI’s three other oil sands project areas are Kinosis, Leismer, and Cottonwood.

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