Page 6 - NorthAmOil Week 24 2022

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BP exits oil sands, enters Bay

du Nord via Cenovus deal

CANADA BP announced this week that it had reached an with BP’s active Canadian marketing and trading
agreement with Cenovus Energy that will see it business, this will position BP Canada for strong
relinquish its 50% stake in the Sunrise oil sands future growth.”
venture while farming into the undeveloped Bay The transaction is anticipated to close later
du Nord project offshore Newfoundland and this year.
Labrador. The deal comes as operator Equinor works
Under the terms of the agreement, Cenovus towards a final investment decision (FID) on
will pay BP CAD600mn ($463mn) plus a varia- Bay du Nord in the next couple of years. Devel-
ble payment with a maximum cumulative value opment of the project was approved by the gov-
Equinor is working of CAD600mn expiring after two years, as well ernment of Canada earlier this year.
towards a final as handing over its 35% stake in Bay du Nord. The transaction also marks another step in
investment decision on The sale of the non-operated interest in Sun- the consolidation of oil sands assets among the
Bay du Nord. rise represents BP’s exit from the oil sands and four largest Canadian producers. International
also illustrates the super-major’s intensifying oil companies (IOCs) have been exiting the oil
focus on future offshore growth in Canada. BP sands for some time, but most of this played
already owns interests in six exploration licences out in the second half of the last decade, with
in the region offshore Eastern Newfoundland. many producers announcing their withdrawal
“This is an important step in our plans to in 2017.
create a more focused, resilient and competitive At the time, oil prices were a factor in driving
business in Canada,” stated BP’s senior vice pres- the exodus of international players, whereas an
ident for the Gulf of Mexico and Canada, Starlee exit now may have more to do with the fact that
Sykes. “Bay du Nord will add sizeable acreage the oil sands continue to struggle with a poor
and a discovered resource to our existing portfo- public image owing to concerns over their emis-
lio offshore Newfoundland and Labrador. Along sions intensity.™

Hamm offers to take

Continental private

US US shale producer Continental Resources Smead Capital Management, which owns
revealed on June 14 that it has received an all- about 2% of the shares and is the largest share-
cash offer from the family trust of its billionaire holder after the Hamm family, stated that it
founder, Harold Hamm, to take the company viewed the offer price as undervaluing the firm.
private. The offer would give the firm a valuation “At $110 oil, it’s worth $110 [per share] or
of $25.41bn. more. At $120 [oil], it begins to look like steal-
Hamm is offering $70 per share to those ing,” said Smead Capital’s president and portfolio
holding the roughly 17% of shares that are not manager, Cole Smead.
owned by his family. The deal would be struc- Continental stated that it had not yet fully
tured as a tender offer, with the Hamm family evaluated the offer, but said it would create a
trust stating in a letter to the board that there special committee of independent directors and
were no financing issues. hire advisers to consider the proposal.
The offer represents a premium of around 9% According to Hamm’s offer letter, if Conti-
on Continental’s closing price on June 13 and a nental rejected the proposal, the Hamm family
premium of about 11% to its volume weighted would remain as long-term shareholders and
average price over the 30 trading days up to June would not push for any strategic options.
13. It also marks a 21% premium to the volume Against the backdrop of stronger commodity
weighted average price of the common stock prices, Continental has been expanding its oper-
traded during 2022. However, the offer is below ations beyond its core focus areas in the Willis-
the level Continental was trading at as recently ton and Anadarko basins. The company entered
as June 9. the Permian Basin in December 2021, when it
Continental’s shares jumped upon the news, acquired acreage from Pioneer Natural Resources,
rising by 17% to reach $75.49 – their highest level and also purchased land from Chesapeake Energy
since September 2014. in the Powder River Basin in March.™

P6 www. NEWSBASE .com Week 24 16•June•2022