Sunshine Oilsands Eyes $1B IPO

(Dow Jones Newswires), June 7, 2011

The buzz about Hong Kong's market for initial public offerings is luring Sunshine Oilsands Ltd., an early-stage Canadian oil-sands company that could lose some of its land to a preserve for caribou.

The Calgary-based company wants to raise around US $1 billion through an IPO in the fourth quarter, a person familiar with the situation said Tuesday. It plans to submit its listing application in July and has hired Holdings Ltd. to handle the share sale.

The listing plan comes as Canadian energy companies seek investments from investors in China amid rising demand for energy resources in the country. Last week, Toronto-listed Husky Energy Inc. said it is exploring a potential secondary listing of its shares on the Hong Kong stock exchange, home to the world's busiest IPO market last year and a market that is increasingly attracting companies outside the region.

Sunshine Oilsands, which was incorporated in early 2007 and isn't expected to produce any oil until next year, owns and controls 4,600 square kilometers of oil-sand leases in the Athabasca sands region in the Canadian province of Alberta.

The Athabasca region holds an estimated 170 billion barrels of a type of heavy crude oil that requires heat, steam or chemicals to extract it from sandy deposits. The oil sands make Canada the holder of the world's third-largest oil reserves, after Saudi Arabia and Venezuela.

One risk facing Sunshine is a land conservation plan unveiled by the Alberta government earlier this year that would expropriate a large section of the company's prospective oil sands land in order to preserve it as a caribou habitat. The conservation plan hasn't been finalized, and Sunshine is negotiating with the government over the scope of the conservation plan as well as potential compensation for seized land.

A Sunshine Oilsands executive wasn't immediately available for comment.

According to Sunshine's 2010 financial statement, the company lost 9.1 million Canadian dollars (US $9.2 million) last year, before accounting for future income-tax credits, and has a deficit of C$17.8 million.

China, the world's second-largest oil consumer after the U.S., has been investing aggressively in Canada's energy sector to fuel its rapidly growing economy. Chinese investment in oil sands has jumped as crude prices surged over the past year amid the global economic recovery, with prices now hovering near US $100.

Last year, state-owned Corp. bought a 9% stake in Syncrude, Canada's largest oil-sands project, for US $4.65 billion. In 2009, Co. purchased a stake in an Athabasca Oil Sands Corp. project for C$1.9 billion.

Sunshine Oilsands in March said it had raised C$230 million through investments from China Life Insurance (Overseas) Company Ltd., Bank of China Group Investment Ltd., Cross-Strait Common Development Fund Co., and several other investors.

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