Connacher Oil and Gas Ltd., the oil-sands company that has retained Goldman Sachs Group Inc. to explore strategic options, fell the most in more than two months after agreeing to sell a Montana refinery.
The shares dropped 9.3 percent to 39 Canadian cents at the close in Toronto, the biggest decline since May 30.
Connacher expects proceeds of between $155 million and $170 million from the sale of its Great Falls refinery to Calumet Special Products Partners LP, the Calgary-based company said in a statement after the close of regular trading yesterday.
The sale of the heavy-oil refinery, which produces gasoline and asphalt for markets in the western U.S. and Canada, may expose Connacher to more commodity price volatility, said Randy Ollenberger and Jared Dziuba, Calgary-based analysts for BMO Capital Markets.
“We believe the loss of the downstream hedge could introduce new volatility given our expectation of periodic weakness in heavy-oil prices through 2013,” they wrote in a note to investors today. BMO rates Connacher a market perform, equivalent to a hold.
Connacher in January said it had retained Goldman Sachs to review its business plan and consider strategic options. The move came after the oil producer received an unsolicited takeover offer last year.