Anonymous Buyer Pays a Record $465 Million CND Price for Alberta Oil Sands Land Sale

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Researched by Industrialinfo.com (Industrial Info Resources; Houston, Texas). Energy companies paid a total of $651 million CND ($566 million USD) for undeveloped acreage in Alberta’s oil sands leases during the February 8 2006 land auction. The single largest purchase was for a total of ten leases in the Athabasca region totaling $454 million CND ($395 million USD) paid by a mystery buyer doing business under the company name 1122131 Alberta Inc. Using a company name like 1122131 Alberta Inc is a common tactic used by companies to keep their strategy under wraps from the competition until they can shore up their position on their leases. One thing is almost certain, the owner of 1122131 Alberta Inc is not a publicly traded company in the US or Canada due to the disclosure rules regarding expenditures of funds to the stockholders of the company. Having said this, there is a strong possibility that the company is being funded by foreign sources of capital.

In December of 2005, unknown Japanese investors announced they were looking to put forward an undisclosed sum in the oil sands patch. In early February, an Indian minister disclosed that India would make several investments in the same area totaling approximately $1 billion USD. Japan already has interest in the oil sands region owned by JACOS (Japan Canada Oil Sands Limited) (Calgary, Alberta), which has oil sands leases in the Hangingstone, Chard, Corner and Thornbury areas. These leases are thought to hold a combined total of two billion barrels of oil. JACOS is in a 75 percent, 25 percent joint venture with Nexen Incorporated (NYSE: NXY) (Calgary, Alberta) to develop the first 50,000-barrel per day phase of the Hangingstone project.

The Chinese have made investments in the area as well. They are 40% owners in the Northern Lights project with 60% owner Synenco Energy Incorporated (TSX:SYN) (Calgary, Alberta), which just announced site selection for a multiphase upgrader in Sturgeon County, Alberta, as a part of its bitumen production and upgrader project. Chinese refiner Sinopec holds the balance of the 40% ownership in the joint venture. The project has an estimated reserves base of 1.49 billion barrels of bitumen in place. Other Chinese companies have made investments in the area as well with companies like MEG Energy (Calgary, Alberta), which is involved in several oil sands ventures and pipeline projects in the Athabasca region. To gain access to these resources for their own use, Chinese owned companies have recently secured transportation agreements with Canadian companies that are planning massive pipeline projects to move the upgraded synthetic crude from the Edmonton, Alberta area to points on the coast of British Columbia near Kitimat.

In conjunction with the mystery buyer’s purchase, the Fort Hills joint venture spent $60 million CND ($52.2 million) to secure two unexplored leases to sure up their resource base as well. The record prices paid on February 8, 2006, seem to indicate a wholesale land grab for acreage in the Athabasca oil sands region and in turn indicates that companies around the world are seeking a stable supply of crude oil. The recent purchases go a long way in validating the prospect that Alberta’s oil sands are truly coming of age as an investment in future crude oil production on a massive scale. One thing is for sure, there is a new player in the oil sands patch and that new player has big bucks to spend.

Industrial Info Resources (IIR) is a Marketing Information Service company that has been doing business for over 23 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.