Canadian Oil Sands Evaluates Selling Some of Its Production Stream

Wall Street Journal ^ | Sept. 8, 2015 | BEN DUMMETT AND CHESTER DAWSON

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Canadian Oil Sands Ltd., one of Canada’s largest producers of crude, is looking into selling some of its future production amid low crude oil prices and a growing debt load.

Canadian Oil Sands owns 37% of the Syncrude oil-sands mining consortium, one of the country’s largest producers of crude from the Alberta oil sands. Production snags at Syncrude’s operations and oil prices that recently fell to six-year lows have hit Canadian Oil Sands particularly hard because the Syncrude project is its only producing asset. In July, Canadian Oil Sands said it swung to a second-quarter loss, and last month Moody’s Investors Service cut its credit-rating downgrade to one notch above speculative grade.

Boston-based hedge fund Highfields Capital Management LP, a company shareholder, recently spoke with Canadian Oil Sands and suggested it consider selling a chunk of its future production for an upfront payment to help boost its sagging stock price, according to people familiar with the matter.

Canadian Oil Sands management didn’t make any promises to Highfields, but said it would consider the idea, one of the people familiar with the matter said.

Highfields is a well-known value investor that meets with the management of the companies in which it holds positions to present ideas to boost share prices. But it doesn’t have a reputation as an activist investor.

Canadian Oil Sands doesn’t need additional financing and isn’t currently pursuing a specific plan to raise cash, according to company spokeswoman Siren Fisekci. But the sale of future production "is an option that we’ve looked at and (continue to) evaluate,” she said.

Ms. Fisekci wouldn’t comment on whether such a meeting with Highfields took place.