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CALGARY AND TORONTO — Athabasca Oil Corp. faces new obstacles in completing a long-promised multibillion-dollar joint venture with partners from Kuwait and Spain, months after it said such a deal was imminent.
The company has said it is merely awaiting government approval to allow one of its buyers to sign the transaction, which markets expect to be worth roughly $2-billion. In August, Ali al-Sammak, Kuwait’s ambassador to Canada, confirmed that senior Kuwait Petroleum Corp. officials had signed a memorandum of understanding, with a final agreement expected in October, toward buying an interest in two Athabasca properties in Alberta.
However, that agreement has yet to be finalized, and people close to the deal say part of the delay stems from difficulties with one of the buyers. Kuwait is not the only acquirer: Spanish company Repsol YPF SA is also involved.
The trouble landing a major foreign joint venture comes during a moment of broader uncertainty for a Canadian energy sector increasingly reliant on overseas capital. Two major transactions – deals to buy Progress Energy Resources Corp. and Nexen Inc., worth over $20-billion in aggregate – remain in limbo as Ottawa scrambles to compile new foreign investment guidelines.
Now, the Athabasca deal also appears to be in a tenuous state, although the Kuwaiti ambassador did not return calls and the company itself remains outwardly confident.
Repsol has kept a low profile for several weeks and those working on the deal now assume the company, burned by the nationalization of its assets in Argentina, is no longer a player, a source said.
Instead, Kuwait has been in discussions with other potential investors about forming a syndicate to buy Athabasca, with bidders that could include private equity buyers.
That is not necessarily a sign that the joint venture talks have fallen apart – but rather that they have cooled. “Everything is on pause now,” one source said. The Kuwaiti group has also been reluctant to act before new foreign investment guidelines are released by the federal government, a source said.
The joint venture would see Athabasca sell a minority interest in its Hangingstone and Birch properties. The company says it does not see Investment Canada concerns, since it’s not an outright takeover.
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