Struggling Canadian Fossils Can’t Find a Buyer
Only three of the 15, mostly smaller fossil companies in Canada’s oilpatch that tried to find buyers in the last 18 months were able to close a deal, according to an analysis released last week by TD Securities.
“It’s getting so bad in the oilpatch that companies in trouble can’t even sell themselves,” Canadian Press reports. Of the 15 that conducted “strategic reviews,” a process that often leads to a merger or an acquisition, “six are still searching for a suitor, four have slipped into receivership, one closed down after selling all of its assets, and another dropped its strategic review and hired a new CEO.”
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Zargon Oil and Gas CEO Craig Hansen described a “‘gulf’ between what buyers are willing to pay and what sellers are willing to accept,” CP notes, “especially for assets offering marginal returns at today’s low oil and gas prices.” By contrast, TD found that 21 of the 29 companies that conducted strategic processes from 2011 to 2014, when oil and gas prices were much higher, were able to sell, refinance, or form corporate partnerships.
But according to a senior United Nations official, it’s time for the Canadian fossil industry to accept this state of affairs as the new normal. Erik Solheim, a former Norwegian Cabinet minister and new executive director of the UN Environment Programme (UNEP), said companies “need to take stock of what’s happening before it’s too late for them,” the National Observer reports.
“Many of you will remember Kodak,” he told an event in Ottawa earlier this month, hosted by the International Institute for Sustainable Development. “They didn’t believe in digital photography. Where is Kodak now? In industrial museums somewhere.”
He added that “if Canada doesn’t embrace change, it will lose. For economic and environmental issues combined. Of course, some fossil fuels will remain a source of energy for some time, but the changes are coming much faster than anticipated. The price of solar is going down much faster than anyone thought. And energy efficiency provides solutions to a lot of issues if we really embrace it. So embrace the change.”