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Osum Oil Sands rejects Waterous Energy Fund share offer as inadequate

The logo for Osum Oil Sands.
The logo for Osum Oil Sands. COURTESY: Osum Oil Sands

EDITOR’S NOTE: This story originally said Osum produced an average of 19,000 barrels of bitumen per day in the first half of 2020 from two oilsands projects. The company said those figures relate to a single project. This story has been corrected. We regret the error.

Private junior oilsands producer Osum Oil Sands Corp. says shareholders should reject a $126-million bid by Calgary investment firm Waterous Energy Fund to nearly double its ownership stake.

The Calgary company says an independent committee struck to review the informal offer made in early November found it undervalues the shares, adding that TD Securities Inc. and RBC Dominion Securities Inc. have provided written opinions that come to the same conclusion.

Osum board chairman William Friley says in a news release the company’s healthy production levels, cost structure and finances mean there is no pressure on its shareholders to sell.

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Waterous announced about three weeks ago it intends to make a formal offer to buy 52.5 million of Osum’s common shares, about 40 per cent of the total, for $2.40 per share.

READ MORE: Cenovus to buy Husky Energy for $3.8B in shares; company will remain in Alberta 

The fund established in 2017 and headed by CEO Adam Waterous said it bought 45 per cent of the outstanding shares last July for the same price from Osum’s three largest shareholders.

If the latest offer succeeds, the fund said its intention is to buy the rest of the shares within about three months.

“The WEF offer significantly undervalues Osum’s strengths as a top tier oilsands operator, financial position, high-quality people and assets, and potential for growth,” said Friley.

Osum says it produced an average of 19,000 barrels of bitumen per day in the first half of 2020 from its Orion oilsands project in northeastern Alberta, which employs steam to produce the heavy sticky oil from wells.

It says it has regulatory approval for projects to bring total capacity to 60,000 bpd.

An aerial image of Osum Oil Sands’ Orion facility.
An aerial image of Osum Oil Sands’ Orion facility. COURTESY: Osum Oil Sands