Husky Oil and Gas Assets Said to Attract Teine, Raging River

  • Saskatchewan assets said to receive most interest from bidders
  • Package expected to be sold piecemeal amid varied interest

Husky Energy Inc. has received interest from several parties, including Teine Energy Ltd. and Raging River Exploration Inc., for parts of a package of western Canadian oil and natural gas assets it is selling, according to people familiar with the matter.

The bulk of the interest received by the Calgary-based oil and gas producer has been focused on its light oil Saskatchewan properties, which collectively produce 88 percent liquids, said the people, who asked not to be identified because the matter is private.

The first rounds of bids came in at the end of March, the people said. The properties have been divided into three main packages and 10 smaller sub-packages.

Husky, which is controlled by Hong Kong billionaire Li Ka-Shing, is likely to sell the properties in several transactions in the coming months, the people said. Other players, including Whitecap Resources Inc., Spartan Energy Corp. and Aspenleaf Energy Ltd., are said to have also expressed interest in some of the assets, the people said.

Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and AltaCorp Capital Inc. are advising on the sale of properties that span from northern British Columbia to southeast Saskatchewan, and amount to the equivalent of roughly 59,530 barrels a day of production, according to the marketing materials. Roughly half of the production is liquids. The combined value of the properties is estimated by Morgan Stanley to be worth up to C$2.1 billion ($1.6 billion).

Representatives for Husky, Spartan and Aspenleaf declined to comment. Teine and Whitecap representatives weren’t immediately available for comment. Neil Roszell, CEO of Raging River, said by phone a confidentiality agreement prevented him from commenting.

Asset Sales

Rob Symonds, Husky senior vice-president of Western Canada production, declined to talk about specifics of any potential transactions at a conference in Toronto this week. He said the value for potential buyers in the western Canadian oil and gas assets is that the resources are underdeveloped compared to their neighbors.

“That is, if you like, the value proposition for the buyers,” he said. “The rationale for Husky is that we’re transforming our western Canadian business from one that has a large number of small plays to being much more focused on fewer plays.”

Husky is also in the midst of selling a stake in some of its pipelines and storage terminals in Alberta and a package of royalty lands in Western Canada.

The company is nearing a sale on the royalty lands after drawing interest from several parties, including Freehold Royalties Ltd., according to people familiar with that process. The package is expected to sell for less than C$200 million, the people said.

A Freehold representative didn’t immediately respond to requests for comment.

Husky said in January it was taking “decisive action” amid persistently low oil prices. It suspended its quarterly dividend at the time, scaled back spending and pushed forward with its asset sales.

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