CALGARY — Enerplus Resources Fund, a Calgary-based oil and gas trust, will go ahead with the planned sale of its minority stake in the Joslyn oil sands project in northern Alberta, the company said Friday as it reported higher profit and revenue.
Enerplus said that after a strategic review of the asset, the company will sell the interest in Joslyn, a development controlled and operated by French oil and gas giant Total SA.
Such a sale would allow Enerplus to focus on its wholly owned Kirby steam-assisted gravity drainage (SAGD) project and other potential developments, Enerplus said in its earnings release.
The announcement came in Enerplus's financial statement, in which the company reported first quarter profits rose to $121.4-million from $107.9-million on higher output and the impact of a recent major acquisition.
In March, Enerplus said it would review strategic options for its 15 per cent stake in Joslyn, suggesting it would try to sell the stake, valued at about $500-million or more.
“A strategic review of our portfolio of oil sands and conventional projects has resulted in the decision to consider options to rebalance our portfolio,” the company said Friday.
“While we believe that both Joslyn and Kirby provide attractive long-term potential, the operated nature of the Kirby project provides enhanced control over the timing and nature of our capital spending profile. In addition, there are more SAGD opportunities within Canada for future growth and SAGD is better suited to our technical competencies and business model.”
In its financial report, Enerplus said it earned 82 cents a unit for the three months ended March 31, compared with 88 cents a unit for the previous year's period.
Three-month revenue rose 33 per cent to $503.7-million from $380-million.
On Feb. 13, Enerplus closed the single largest acquisition it its history — the $1.7-billion acquisition of Focus Energy Trust. The acquisition changed the company's output to just over 60 per cent natural gas and 40 per cent crude oil and natural gas liquids in its portfolio.
In the first quarter, production averaged 89,150 oil equivalent barrels a day, up from 86,028 the previous year.
Total E&P Canada Ltd. bought an 84 per cent stake in the Joslyn oilsands leases in 2005 through its acquisition of Deer Creek Energy.
In addition to the Joslyn assets, the company also has a stake in the Surmont leases as the French-owned company expands to become a growing Alberta oil sands developer.
The Joslyn project, in which Enerplus acquired its minority stake in 2002, could produce up to two billion barrels of bitumen over its planned 30 years of operation.
Total Canada would seem a likely buyer for Enerplus's stake, especially if the French oil company wants to expand its share of production of the oil sands project to feed future refining operations to give the company more value-added oil products to sell.
The first phase of the Joslyn project entered commercial production in late 2006, with bitumen recovered using SAGD technology, which involves injecting steam deep into the oil sands to melt the bitumen and then pumping out the oil.
Production at Joslyn should reach 10,000 barrels per day by 2009 while work is under way to prepare for surface mining to boost output significantly over the next decade.
Enerplus has said it believes Kirby has the potential to produce 30,000 to 40,000 barrels of bitumen per day.
In 2002, Enerplus acquired a 16 per interest in Joslyn from Deer Creek, later bought by Total.
Two years ago, Enerplus sold a 1 per cent interest in Joslyn to Laricina Energy Ltd., a deal that gave the trust a 12 per cent stake in the smaller private oil sands company.
© Canadian Press
