Japex is assessing an oil sands divestment in Canada, Reuters reported today. Accordingly, the company is seeking a buyer for its 75% stake in the Hangingstone oil sands facility.
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Japex on considering sale options
Today, international media reported that Japanese state-backed oil producer Japan Petroleum Exploration Co is considering a sale -among other options- for its Hangingston oil sands project in Canada.
Accordingly, Japex is seeking a buyer for its 75% stake in the Hangingstone oil sands facility in Canada. According to Reuters, two sources with direct knowledge of the matter previously told the media group so.
Indeed, several global oil majors have similarly rushed to sell Canadian oil sands assets over the past four years. Particularly since they have concerns ranging from high production costs and emissions to scarcity of capital.
Worth noting, Japex unit Japan Canada Oil Sands Ltd (JACOS) is the majority owner of Hangingstone. The other owner is Chinese state-owned oil giant CNOOC holding the remaining 25%.
Moreover, following the potential sale, one source said JACOS could fetch more than C$200 million ($160 million). Accordingly, this could attract notable bids as it has abundant oil reserves that would benefit from fresh funding.
In this sense, Yuki Goto, a spokesperson at Japex, told Reuters by phone; Indeed, “we are considering various measures including the sale of our stake and cutting production costs; particularly, to improve the profitability of the project, but nothing has been decided.”
Other companies joining the trend
Reuters also added that JACOS Japex is working with an advisor on the sale. Moreover, the sources cautioned that a final decision on the deal has not yet been reached, and JACOS Japex could still retain it.
Indeed, Hangingstone is a steam-assisted oil production site that began output in 2017. Since then, it averaged 23,000 barrels per day (bpd) in the first four months of this year, according to the Alberta Energy Regulator.
However, an overall deal activity involving North American energy companies accelerated; mainly, as crude oil prices surged after crashing last year during the pandemic.
For instance, Calgary-based ARC Resources, which in March bought rival Seven Generations Energy in a C$2.7-billion deal; sold its Alberta’s Pembina Cardium assets to privately held Ricochet Oil Corp for around C$100 million.
Accordingly, the deal enables it to focus on becoming a pure-play Montney producer, one of the sources said.
Separately, Reuters reported that Schlumberger began a formal process to sell its Canadian joint venture with Torxen Energy. In fact, the joint venture spent over $1 billion to buy oil and natural gas assets in the Palliser block in Alberta from Cenovus Energy in October 2017.