Osum Oil Sands buys project from Shell in Cold Lake region

Posted: Jun. 10, 2014

By Jeffrey Jones

Private-equity-backed company pays $325-million for a development it could eventually link to its own nearby facility.

Osum Oil Sands Corp., a private-equity-backed company chaired by former Suncor Energy Inc.’s chief executive officer Rick George, is buying a steam-driven oil sands project from Royal Dutch Shell PLC for $325-million, a development it could eventually link to its own nearby facility.

For Shell, the sale of the Orion project in the Cold Lake region of Alberta comes about two years after it first put it on the market.

Orion produces about 6,700 barrels of bitumen a day from 22 production and steam-injection well pairs and has been in operation since 2007. It is 18 kilometres from Osum’s Taiga lease, for which it has won approval for a 35,000-barrel-a-day project.

The two projects could eventually be tied together as a single production platform, Osum CEO Steve Spence said in a statement.

Osum said it has financing commitments from Barclays Bank PLC and Goldman Sachs Lending Partners LLC for credit facilities of $225-million (U.S.). The balance of the purchase will be funded from cash on hand as well as from existing shareholders, it said.

The company is backed by such private equity players as Warburg Pincus, Blackstone Group, BlackRock, Kern Partners, as well as Korea Investment Corp.

Shell picked up the Orion project in its $2.4-billion (Canadian) acquisition of BlackRock Ventures in 2006. It first sought buyers in May, 2012, but a year ago it said none of the bids it received had matched its own view of the value.

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