To address its liquidity and capital structure
Junior oilsands producer Southern Pacific Resource Corp. has launched another review of strategic options designed to solve its money woes despite calling off a similar failed process in August.
The Calgary-based company said Wednesday it had hired RBC Capital Markets as financial adviser to “identify, examine and implement strategic and financial alternatives available to the company in order to address its liquidity and capital structure.” It said it would not provide updates unless a deal is reached.
The wording is similar to that used by Connacher Oil and Gas Ltd. of Calgary in a news release Monday announcing that it had hired BMO Capital Markets to “devise and implement a strategy to address Connacher’s liquidity and capital structure.” Both companies have run short of capital while trying to implement changes in thermal oilsands projects that have failed to reach nameplate capacity because of operational difficulties.
Southern Pacific added the process may include the sale of the company or all or a portion of its assets, recapitalization, debt restructuring or any combination thereof — Connacher was less specific about what options are being considered.
Analyst Michael Dunn of FirstEnergy Capital said the junior oilsands sector is under pressure from all sides.
“Our view even prior to the recent drop in oil prices was that with the federal government putting a halt on majority ownership of oilsands by state-owned entities a couple of years back, and the advent of shale oil in North America, the oilsands would increasingly become dominated by the incumbents,” he said.