Connacher Oil and Gas hit up BNP Paribas last Wednesday for $180 million of financing for its Great Divide oil sands project. The $180 million term loan "B" is priced at LIBOR plus 2 3/4% and is expected to syndicate pretty well, according to a banker.
"It's probably not a high probability for us considering where energy prices have been going," said an investor. "Its project finance and it's the first round of financing."
In August 2005 Connacher began the application process requesting approval to implement a steam-assisted gravity drainage (SAGD) scheme for the production of bitumen from the McMurray Deposit in the Athabasca Oil Sands Area in Alberta, Canada. The company received permission in July to begin building the SAGD.
Bitumen is a prime feed stock for petroleum production in the oil sands area which is a combination of clay, sand, water and bitumen from which the bitumen is extracted and refined into petroleum products. SAGD is an enhanced oil recovery technology used for heavy crude oil and bitumen. Connacher is a public Canadian oil and natural gas exploration, development and production company based in Calgary, Canada.
"We're waiting for Moody's Investors Service to put out their final ratings and then through the course of the next couple of weeks we'll see what the demands are," said Richard Gusella, president and ceo, citing that pricing on the facility is floating rate depending upon the company's credit rating. "What the market will give us is what they will give us," he said. Ratings were anticipated to come at the end of last week, but could not be determined by press time.