Oil Sands Investors Come Forward Despite Cost of Development

More Oil Sands Deals

The oil sands projects, always expensive to fund for development tend to bwe dominated by the giants such as Imperial Oil, BP PLC and Royal Dutch Shell PLC. New deals involving partnerships with private smaller companies to International investors may allow ongoing development of the oil sands, which involve considerably more resources than a simple drilling well operation. Instead of millions, oil sands project run to billions.

The economic downturn may have created a solid environment for private and smaller corporations to develop expensive oil sands projects if they can raise funds through debt, equity or other investors. Now that oil prices are on the rise, this is likely. Smaller names are already in the oil sands business, led by the small public operations such as Connacher Oil and Gas and UTS Energy Corp.

Smaller companies have found it relatively easier to raise funds. For example, Connacher sold $187 Million in notes and MEG has raised about $2.5-billion. It may take oil prices 50 percent higher than today’s prices to encourage take overs of these companies by bigger players, but in the meanwhile International investors such as PetroChina seem ready to step forward.