Nova Scotia Resources Sale Assured
Nova Scotia’s Crown-owned oil and gas company has completed the sale of its assets in the Sable Offshore Energy Project (SOEP).
A process to offer the assets to its partners in the project has resulted in the same sale price for the assets as originally negotiated with the Emera, Pengrowth, PanCanadian consortium.
The price for the SOEP assets was set in a purchase and sale agreement effective Dec. 1, 2000, and signed on Feb. 6 this year, at $355 million plus interest. The deal to sell the shares in the company for $65 million plus interest is expected to close later this summer.
Finance Minister Neil LeBlanc, who is also Minister responsible for Nova Scotia Resources Ltd., expressed satisfaction that the complex arrangement to sell the company’s assets now is assured.
“I am particularly pleased that the outcome for the province is precisely what was expected when we signed the deal ,” said Mr. LeBlanc. He also expressed satisfaction that the province was able to successfully conclude a deal that puts an end to a steady stream of losses for the people of Nova Scotia.
“As a result of the sale and as required under provincial law, the province expects to be able to pay back approximately one- half the money borrowed to finance the NSRL investments and losses over the history of the company,” said Mr. LeBlanc.
Final proceeds to the province are expected to be $420 million plus approximately $15 million for interest back to Dec. 1, 2000. NSRL ran up a debt load of just under $800 million during its 20 years of operation.
Because the essential impact of the sale on the province remains as it was when the deal was signed on Feb. 6, the financial impact will be recorded in that fiscal year.
Although the financial impact for the province is unchanged, the number of buyers for the NSRL assets has increased. Several partners in the Sable Offshore Energy Project have exercised their rights to purchase certain NSRL project interests.
Shell Canada, Imperial Oil, ExxonMobil and Mosbacher Services have purchased NSRL’s interests in the gas plant at Goldboro, the fractionation plant at Point Tupper, the natural-gas liquids line between the two plants and the sub-sea gathering lines.
As a result, Emera will now purchase the balance of the infrastructure -- NSRL''s interest in the offshore platforms and the Sable Offshore Energy Project natural gas reserves.
PanCanadian is acquiring the shares of NSRL, which will give them the benefit of NSRL’s remaining non-SOEP-related assets.
Pengrowth, the final partner, will proceed with its plan to gain the benefit of the reserves through a royalty arrangement with Emera. Pengrowth has also agreed to purchase the NSRL shares should PanCanadian be unwilling or unable to proceed with its part of the agreement.
The adjustment date for the sale remains as of Dec. 1, 2000. From that date, the province began to earn interest on the sales proceeds, and the purchasers were responsible for all costs incurred and revenues gained from the sale of the depleting gas reserves.
The expected net cash benefit from the sale of the reserves is the basis for the $420 million bid price. During the 6 1/2- month period from the beginning of December to the middle of June, that net cash benefit is approximately $35 million.
“The province has exited a very complicated and uncertain business,” said Mr. LeBlanc. “We gained fair market value for the company’s assets. In future, we will participate in the fortunes of the offshore through more appropriate and less risky instruments -- royalties and economic growth through industry development.”
Further information on the NSRL sale process, including a background fact sheet may be found in the news section of the Nova Scotia Petroleum Web site at: www.gov.ns.ca/petro .