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Koch Billionaires Throw Oil Rates on Canada as Foreign Exodus Continues

CALGARY – Once one of the largest landowners in the oil fields, industrial conglomerate Koch Industry Inc. has sold its upstream leasing and abandonment licenses in the heavy oil game, joining an influx of foreign companies emerging from bitumen formation.

Cannes-based Vichita, Koch Industries, has struck a deal to sell thousands of acres of land in Calgary to Calgary-based Cavalier Energy Inc., a subsidiary of the Riddl family controlled by Paramount Resources Ltd. in a June transaction. confirmed "Financial Post".

Koch, one of the world's largest privately held companies owned by US billionaires and Republican donors Charles and David Koch, also abandoned licenses that he did not sell in a Paramount transaction and allowed the lease to expire.

Paramount, meanwhile, is expanding its holdings in heavy fuel oil, which already includes Cavaliier ownership and a stake in steam oil maker MEG Energy Corp. Founded by the late billionaire geologist Clay Riddle, Paramount has built a reputation for exploring oil and gas resources in new shows and in unused corners of existing shows. In 2002, his son, Jimmy Riddle, became President and CEO of Paramount and took on increased responsibility for the company and its subsidiaries. He is now president and chief executive of Paramount and chief executive of Cavalier.

"Most of the Koch oil sands licenses have been transferred to Paramount Resources Ltd. All the remaining well site licenses have been abandoned, meaning they are permanently sealed and removed from service, "said Alberta Energy Regulatory spokesman John Roth. by email.

Paramount, which has a market capitalization of $ 806m, did not disclose the transaction outside the land ownership update in an investor presentation this month. The company's latest investor presentation says Cavalier now owns rights to 1,994 net parts of the country in oil – a 512 percent increase over the 326 net shares it had at the beginning of the year.

Alberta's government lists part of the land as 640 hectares, which means Cavalier can hold nearly 1.3 million hectares of oil – six times the foot of the Calgary.

David Koch in 2012.

Scott Eels / Bloomberg files

Neither Paramount nor Cavallier responded to requests for comment.

Koch remains invested in the Canadian energy industry through its subsidiary of Flint Hills Resources, which owns oil storage tanks at Hardists, Alta and US refineries that process diluted bitumen from oil.

However, the company confirmed that it had sold its upstream oil plants and handed the expired lease to the show.

"Those leases, which were maintained by Koch Oil Sand Holdings, vary with age. These recent transactions are just a reflection of the opportunities available in the market and our desire to prioritize other initiatives, "Koch spokesman Rob Carlton said in an email.

Koch's departure from crude oil continues the trend of foreign companies leaving the show, following diversions of Shell Canada Ltd., Konoco Phillips, Devon Energy Corp, Marathon Earl Corp, Statoil SA, Total Product Sales 2017 and others. unproductive assets in the difficult oil formation, as the lack of new export pipelines made development of the area more difficult and profitable, like the Permian basin in Texas, has baffled investors away from Canada.

Most of the buyers were large Canadian producers, such as SunCor Energy Inc., Canadian Natural Resources Ltd., Ginos Energy Inc. and Atabaska Oil Corp. which strengthened their positions in oils.

These recent transactions are only a reflection of the opportunities currently available … and our desire to prioritize other initiatives

Koch spokesman Rob Carlton

Now, Paramount through Cavalier has emerged as Canada's leading oil leaseholder.

While the value of the Koch-Cavaliar deal has not been disclosed, underdeveloped crude oil prices have fallen dramatically from their peak 10 years ago when foreign companies and domestic producers bought blocks in the performance at inflated prices, said Eight Capital analyst Jill Skolik.

Much of the land that has changed in the show recently shows attempts by larger companies to acquire parcels similar to their existing facilities, which look like "filling the taxpayer", Skolnik said.

CNRL's recent deal to buy Joslyn's unused oil lease to expand its Horizon oilfield was an example of how valuable land adjacent to existing projects is valuable, he said.

Oillands rentals away from the activity center near Fort McMurray and Cold Lake, Alta, are less valuable and Koch is not the only leasing company back in the province, not developing the land.

CNRL Oil Horizon Oil Project.

Polite is a Canadian Natural Resources Ltd.

The Post could not confirm whether the Paramount Koch lease was in close proximity to other oil projects. Some of Koch's enormous landings have been in distant, deeper, and technically challenging parts of the oil region, called carbonates, but it is unclear which leases were sold and which were leaking.

Koch is not the only company to allow leasing out of fuel oil, as the pace of performance in the show has slowed in recent years.

In an effort to cut costs, MEG President and CEO Derek Evans said in a recent call to his company that his company would allow leases on its long-term farms rather than pay escalating land leases.

"There is some land, as we would call our fourth development project in the Duncan area, these are the lands we are losing. We're not going to renew the leases on them, "Evans said. "They were at a point in their lives where the annual rent of those rentals was supposed to rise in price."

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