TORONTO, May 19 - Connacher Oil and Gas Ltd
(CLL.TO) on Tuesday said it was taking steps to raise financing
that could help fund its Algar oil sands project through an
equity offering and a syndicated loan. Net proceeds of the stock offering would go to fund capital
expenditures and general corporate purposes, and could be used
to restart construction at Algar, its second steam-driven oil
sands development in northern Alberta. The company did not
specify the expected size of the offering in its statement. After the announcement, Connacher's stock dropped nearly 4
percent on the Toronto Stock Exchange, while the S&P/TSX energy
index rose nearly 5.5 percent. With oil prices at a six-month high of more than $60 a
barrel, analysts said the stock may have dropped on investor
concerns about share dilution after the equity offering. "There's not any operational reason," said Justin Bouchard
with Raymond James in Calgary. "Seems like (the equity
offering) is the only reason out there."
Connacher suspended construction on the C$345 million ($298
million) Algar project late last year The company is one of several oil sands developers that
deferred plans for projects due to weak oil prices and shaky
credit markets. Along with the offering, Connacher is negotiating with a
Canadian bank on behalf of a syndicate of proposed lenders. It
aims to secure a revolving working-capital facility and a
construction loan for Algar. While a decision has not yet been made on whether to push
ahead with Algar, the loan and the offering would likely raise
enough to fund the remaining C$200 million of constructions
costs for the project, the company said. Early this year, Connacher resumed production from its
Great Divide project in Alberta after curtailing it when
operations became unprofitable. Connacher shares were down almost 5 percent to C$1.35 on
Tuesday on the Toronto Stock Exchange. ($1=$1.16 Canadian)
(CLL.TO) on Tuesday said it was taking steps to raise financing
that could help fund its Algar oil sands project through an
equity offering and a syndicated loan. Net proceeds of the stock offering would go to fund capital
expenditures and general corporate purposes, and could be used
to restart construction at Algar, its second steam-driven oil
sands development in northern Alberta. The company did not
specify the expected size of the offering in its statement. After the announcement, Connacher's stock dropped nearly 4
percent on the Toronto Stock Exchange, while the S&P/TSX energy
index rose nearly 5.5 percent. With oil prices at a six-month high of more than $60 a
barrel, analysts said the stock may have dropped on investor
concerns about share dilution after the equity offering. "There's not any operational reason," said Justin Bouchard
with Raymond James in Calgary. "Seems like (the equity
offering) is the only reason out there."
Connacher suspended construction on the C$345 million ($298
million) Algar project late last year The company is one of several oil sands developers that
deferred plans for projects due to weak oil prices and shaky
credit markets. Along with the offering, Connacher is negotiating with a
Canadian bank on behalf of a syndicate of proposed lenders. It
aims to secure a revolving working-capital facility and a
construction loan for Algar. While a decision has not yet been made on whether to push
ahead with Algar, the loan and the offering would likely raise
enough to fund the remaining C$200 million of constructions
costs for the project, the company said. Early this year, Connacher resumed production from its
Great Divide project in Alberta after curtailing it when
operations became unprofitable. Connacher shares were down almost 5 percent to C$1.35 on
Tuesday on the Toronto Stock Exchange. ($1=$1.16 Canadian)
