Agreement to Sell Crown Oil-Gas Company Signed

The Government of Nova Scotia has accepted a recommendation from the board of directors of Nova Scotia Resources Ltd. to sell the Crown-owned company and its assets, Finance Minister Neil LeBlanc announced today.

The deal, approved by cabinet and signed today, is with Emera Inc., Pengrowth Energy Trust and PanCanadian Petroleum Ltd. They would pay a total of $420 million for the company and its assets.

"Oil and gas exploration is a very risky business", said Mr. LeBlanc. "With the private sector ready to take those risks, and Nova Scotians in a position to benefit from our offshore resources there is no reason to gamble with taxpayer dollars."

Before Emera and Pengrowth can proceed with their part of the deal, NSRL's assets related to the Sable Offshore Energy Project must first be offered to two other partners in the project. Completion of the deal also requires consent from other Sable project-related parties.

"We think the principals involved should be able to work through the issues and bring this to a successful conclusion," said the minister, who sounded a note of caution. "If certain agreements are not reached, we may have to terminate this deal to protect the interests of Nova Scotia taxpayers." The province would then have the option of either continuing the sale process or keeping NSRL.

Cabinet accepted the NSRL recommendation because it represented the highest bid following an exhaustive process by the NSRL board with the support of Scotia Capital Inc.

"We accepted the highest bid that was on the table at the end of the process", said Mr. LeBlanc. "This is the best opportunity to get the highest cash value for the company."

The sale does not include the two per cent gross overriding royalty in a potential Deep Panuke project. This royalty will be retained to enable taxpayers to maintain a risk-free interest in this project.

The sale would end a 20-year track record of mounting losses and an increasing debt for the provincial Crown-owned company. Most of NSRL's offshore oil and gas investments and related costs have been written off. The major exception was the recent investment in the Sable Project.

The net cash payment of more than $400 million would be used to pay down debt. It would also result in a one-year positive impact on the province's bottom line.