Canadian oil-sands producers are considering following Sunshine Oilsands Ltd. in raising capital on the Hong Kong stock exchange to take advantage of Asian energy demand, a lawyer working with the companies said.
The transactions could involve initial public offerings or secondary listings, said Rick Pawluk, a partner at McCarthy Tetrault LLP in Calgary and adviser to Sunshine Oilsands on their Hong Kong IPO. The deals would raise “hundreds of millions” of dollars for the Calgary-based companies, he said, declining to identify them.
“At the moment there are more pools of capital in that part of the world,” Pawluk said in a phone interview yesterday. “Management has to be more flexible in how to raise capital. North America is not an automatic choice anymore -- you have to look at other markets.”
Chinese interest in Canada’s oil sands led Cnooc Ltd. to pay $2.1 billion in cash and debt for Opti Canada Inc. last year. Oil-sands production is expected to more than double to 3.7 million barrels a day by 2025, according to the Canadian Association of Petroleum Producers.
Sunshine Oilsands raised HK$4.49 billion ($580 million) in a Hong Kong initial public offering on March 1. Most of the proceeds will fund the Calgary-based company’s oil-sands development. China Investment Corp., the nation’s sovereign wealth fund, agreed to buy $150 million of stock and hold onto it, according to the prospectus. The shares have declined 4.7 percent since their debut.
“More investment by Asian investors will definitely speed the rate at which assets are developed,” said Robert Mark, an energy analyst for MacDougall, MacDougall & MacTier Inc., a Montreal-based investment firm. “This is Economics 101. Asians have capital account surpluses and are short on commodities. It’s a natural match.”