OPTI weighs sale of company

The Long Lake project in Alberta, a joing venture of OPTI Canada and Nexen

Oil sands developer OPTI Canada Inc. said Tuesday it may seek a buyer as part of a review of strategic alternatives as the pace of takeovers in the country's energy sector picks up.

The move comes as OPTI tries to deal with its flagging share value as the price of oil strengthens but its main project struggles to produce reliably in its early months.

The company, known for its 35 per cent stake in Nexen Inc.'s Long Lake, Alta., oil sands project, said its board is examining such alternatives as a sale or merger, restructuring of debt or an asset sale.

Opti said in a release that the improving economy and rising prices for oil sands assets favoured remaining independent but its board wants to decide the best course for raising the price of its shares.

It is weighing its options just days after fellow small oil sands developer UTS Energy Corp. sold $250-million worth of leases to Imperial Oil Ltd. and Exxon Mobil Corp. , and after Asian state oil companies have bought up a host of Canadian energy assets.

“If there was any time to try to do this, probably now is the time, given what UTS did and PetroChina and Athabasca Oil Sands did," Genuity Capital Markets analyst Phil Skolnick said.

In August, PetroChina spent $1.9-billion to scoop up stakes in two oil sands projects owned by privately held Athabasca, sparking speculation that OPTI could be next on the shopping list for Asian firms.

Companies from China, South Korea and elsewhere are anxious to buy up long-life oil sands developments as they seek energy assets around the world to help fuel their growing economies.

Another possible buyer would be Nexen, which has a right of first refusal on OPTI's interest in Long Lake. An official with Nexen was not immediately available for comment.

At its current price, OPTI has an equity value of about $530-million.

OPTI shares have fallen 42 per cent over the past 12 months as Nexen struggles to raise output from the Long Lake project, saying last month that it was unlikely to reach its 60,000 barrel per day capacity until at least 2011.

OPTI was also hit by the credit crunch and was forced earlier this year to sell a 15 per cent stake in the project to Nexen for $735-million, making it a smaller partner in a project in which it once controlled a half interest.

The company has hired Scotia Waterous and TD Securities to act as financial advisers.

It did not say how long it would take to complete the review.

The decision to pore over alternatives signals OPTI feared it could face financial pressure as early as next year, Mr. Skolnick said. That would be after it had raised $150-million in a stock issue last June.

“If production doesn't ramp up, because of the interest payment that they have on their notes, they could run out of financial flexibility," he said.