Athabasca Oil Corp. confirmed Friday that it is in the early stages of forming a joint venture for two of its Alberta oilsands properties.
The news followed a report in the Globe and Mail that Kuwait's state-owned petroleum company is looking to invest as much as $4 billion in an oilsands partnership. The newspaper quotes Kuwait's Ambassador to Canada, Ali al-Sammak, as saying the deal with Athabasca should be finalized by October.
Athabasca said it made the announcement at the behest of the Investment Industry Regulatory Organization of Canada. Trading in the company's shares had been halted on the Toronto Stock Exchange pending news.
After trading resumed Friday, the stock - which was the second most heavily traded of the day - closed up 8.5 per cent to $13.58.
"Athabasca confirms that it has signed a letter of intent that contemplates a joint venture involving Athabasca's Hanging stone and Birch properties," the company said in a release, which did not identify the potential joint-venture partner or specify the value of the deal.
Whether the proposal goes ahead depends on a number of things, including internal and regulatory approvals, Athabasca said.
"Athabasca cautions that no assurance can be given that the transaction contemplated by the letter of intent will be completed."
Some foreign investments are subject to review by the federal industry minister, who must decide whether they are of net benefit to Canada. Generally, acquisitions worth more than $330 million trigger such a review.
How exactly the assets would be divvied up in a potential deal between Athabasca and the Kuwaiti company remains to be seen, so it's not clear whether it would have to go through that process.
Hangingstone, 20 kilometres southwest of Fort McMurray, Alta., is expected to start producing oil in late 2014. Athabasca says it has the potential to produce more than 80,000 barrels a day. The Birch property, 105 kilometres northwest of Fort McMurray, Alta., is not as far along in its development. Athabasca plans to submit a regulatory application later this year for its first 12,000 barrel per day phase.
