Canadian Natural Resources Ltd., the nation’s third largest oil and gas producer by market value, will buy energy assets from Barrick Gold Corp. for about C$223 million ($217 million) to acquire production in Alberta.
Canadian Natural will pay C$173 million and a royalty valued at about C$50 million, Toronto-based Barrick said today in a statement.
Barrick, the world’s biggest gold producer, also will sell some energy assets to Venturion Oil Ltd. for about C$59 million and to Whitecap Resources Inc. for about C$174 million, the mining company said. Whitecap, based in Calgary, said June 27 it agreed to buy Alberta energy assets from Barrick for C$173.6 million.
The deals are valued at a combined C$455 million, Barrick said. It expects to recognize a loss of about $500 million in the second quarter as a result of the sales, which are expected to close by the end of this month.
Barrick said in January it started a process to sell its oil and gas unit, which had revenue of $153 million last year, or 1.1 percent of the company’s total sales, according to data compiled by Bloomberg. Chief Executive Officer Jamie Sokalsky is reviewing growth plans and seeking to offload assets as gold heads for its first annual drop since 2000.
“A successful sale of Barrick Energy is a necessary refocusing of the company’s portfolio away from non-gold and non-core assets,” Greg Barnes, a Toronto-based analyst at TD Securities Inc., said in a note today. The price is “slightly” below expectations, he said.
Barrick’s energy unit, originally known as Cadence Energy Inc., was acquired for C$410 million in 2008. Barrick hedges fuel costs through Barrick Energy’s production and the net contribution it received from the unit diminished as a result of the spread between Canadian and U.S. oil prices, the company said in January.
Barrick said June 28 it expects to take a writedown of as much as $5.5 billion on its delayed Pascua-Lama gold and silver project in the Andes. It may take other “significant” impairment charges, the company said at the time.
Barrick’s financial advisers on the energy deals are Rothschild and Scotia Waterous. Its legal adviser is Norton Rose Fulbright Canada LLP.