IHS Markit analysts estimated that the state-backed firm’s Canadian assets could fetch as much as $1.5 billion for TAQA, as it is commonly known.
TAQA’s decision to exit Canada comes after it announced this month a review of its onshore and offshore oil and gas assets, spread across Canada, the Netherlands, Britain’s North Sea and the Kurdistan region of Iraq.
The company is seeking to expand its electricity generation, while reducing carbon emissions by selling fossil fuel assets.
TAQA is working with Tudor, Pickering, Holt & Co (TPH) and Jefferies for its Canadian asset sales the sources said. It will make confidential presentations to interested parties in October, a sale document reviewed by Reuters shows.
TAQA’s assets in Canada produced around 73,000 barrels of oil equivalent per day last year, accounting for more than 60% of its entire oil and gas portfolio during 2020. The company says it is among the Canada’s top 15 oil producers by volume.
The sources requested anonymity as the sale discussions are confidential. TAQA, TPH and Jefferies did not immediately respond to a Reuters request for comment.
“Based on recently comparable gas-weighted transactions in Canada, TAQA’s upstream Canadian assets may fetch $1.3-1.5 billion,” Braden Orr, principal research analyst at IHS Markit, said.
“However, TAQA sells it Canadian gas production based on the AECO benchmark, which has historically traded at a discount to the Henry Hub benchmark, which we believe could put a downward pressure on the valuation,” Orr added.
TAQA’s move comes after other foreign oil producers exited Canada over the last four years due to concerns ranging from high production costs and emissions to scarcity of capital.
Since 2016, foreign oil producers including Exxon Mobil, Royal Dutch Shell, JAPEX and others have sold assets worth more than $33 billion in Canada.
TAQA had also suffered a large drop in earnings from oil and gas operations last year due to the coronavirus pandemic hitting demand. Its oil and gas unit posted a 1.52 billion UAE dirham loss last year and core earnings slumped 71%.
Reuters had reported that TAQA was in talks to sell some of its assets in Alberta and British Columbia, with production of around 9,359 boepd, to privately-held Blue Sky Resources Ltd. It was not immediately clear if that sale had been scrapped or if the firms will try to proceed with it.
TAQA’s sales document says it will consider bidders willing to buy either all the Canadian assets or all of its global oil assets. Any deals “smaller than a ‘country exit’ would need to complement the larger transaction (s) and provide exceptional value”, the document says.