PetroChina takes over Canadian oil sands project

Canadian oil producer Athabasca Oil Sands Corp. (TSX: ATH) has exercised its option to sell its remaining 40 per cent interest in the MacKay River oil sands project to Cretaceous, a unit of Chinese oil giant PetroChina for about C$680 million.

The deal, announced this morning, comes less than a week after Alberta regulators approved the planned 150,000-barrel-a-day northern MacKay River project, in Alberta, Canada. With this sale, PetroChina takes full ownership of this development, one of the latest northern Alberta's oil sands projects, following a growing trend of Chinese companies buying energy producers and miners in Canada and the rest of the world.

“Since creating the joint venture with Cretaceous in February, 2010 and until our exercise of the put option, Athabasca has grown and diversified. We added approximately three billion barrels of contingent resource (best estimate) through successful drilling and acquisitions, reaching approximately 10 billion barrels of contingent resources (best estimate),” said Athabasca’s president and CEO Sveinung Svarte.

Svarte added that Athabasca decided to sell its remaining stake in MacKay River "because it believes the long-term prospects of the company are enhanced by deploying its capital and resources into its other development projects."

He said that it would save about $190 million in capital spending this year from the divestiture.

Last year’s deal of $1.9-billion between Athabasca and PetroChina also included the Dover project, which is expected to obtain regulatory approval about a year from now. Once it does, there will be an identical divestiture option.

The first phase of the MacKay River project is expected to produce 35,000 barrels per day, eventually expanding to 150,000 barrels.

Construction of the project will begin next month with startup targeted for 2014.