IN THE NEWS / PanCanadian Petroleum Begins Talks To Create Heavy-Oil Alliance
Sees Van Horne unit as umbrella for several firms' assets
By CLAUDIA CATTANEO - The Financial Post
CALGARY -- PanCanadian Petroleum Ltd., the oil and gas production arm of
Canadian Pacific Ltd., is in talks with other Canadian energy companies about
combining heavy oil operations under its new heavy oil company, Van Horne Oil &
Gas Ltd.
David Tuer, PanCanadian's president and chief executive, said yesterday the
"exploratory talks" revolve around having as-yet-unnamed companies move heavy oil
assets into Van Horne and becoming part-owners.
Longer term, Van Horne may be sold in a public offering.
Mr. Tuer declined to name the companies with which PanCanadian is in discussions.
However, the likely candidates can be counted on one hand. They include Gulf
Canada Resources Ltd., Ranger Oil Ltd., Canadian Occidental Petroleum Ltd.,
Imperial Oil Ltd., and Alberta Energy Co.
Dick Auchinleck, Gulf president and chief executive, would neither confirm nor deny
that the company is in talks with PanCanadian. But he said Gulf is looking at "several
options" for its heavy oil assets.
PanCanadian created Van Horne this year to hold two thirds of its heavy oil
production. Remaining heavy oil assets will stay with the parent.
Van Horne will legally come into being on Jan. 1 as an independent company with its
own management and board.
"We are finding there are companies out there that are interested in what we have to
say," Mr. Tuer said. "We believe that some of them will decide to do business with
us."
Because of low oil prices, PanCanadian will join other energy firms in slashing its
capital spending for 1999.
Mr. Tuer said 1999 spending, to be finalized at a board meeting today, will fall below
$700-million, down from $870-million in 1998, and down from the $1-billion target
set for 1998 before oil prices cratered in the fall of 1997.
However, adjustments will be made if market conditions change, Mr. Tuer said.
PanCanadian, 87% owned by CP, is one of Canada's major producers of heavy oil
and its largest producer of natural gas. Heavy oil makes up more than a third of
Canadian oil production. |
