Newspaper article The Canadian Press

Private Equity Firms Zeroing in on Western Canada Oilpatch Bargains

Newspaper article The Canadian Press

Private Equity Firms Zeroing in on Western Canada Oilpatch Bargains

Article excerpt

Private equity firms chase oilpatch bargains


CALGARY - The largest energy-focused private equity firm in Calgary is ramping up its oilpatch investing pace to take advantage of bargain prices and an expected recovery in oil prices next year.

ARC Financial Corp. has been more active than usual in 2016, fuelled in part by $1.5 billion pledged a year ago to a new investment fund, said co-CEO Lauchlan Currie in a recent interview. ARC has $5.3 billion in investor commitments through eight energy funds and has invested in over 180 companies over the past two decades.

"We are backing a number of early stage private companies that are out looking for acquisitions," Currie said.

"We just see it as one of the best opportunities in a long time because we're anticipating a recovery probably into 2017. And we're capturing high-quality assets that you're just not normally going to get access to."

Bruce Edgelow, vice-president of strategic initiatives for ATB Financial, said in a recent interview that commodity price volatility has made it difficult for buyers and sellers to agree on prices over the past two years. But he said there are plenty of well-heeled Canadian and international investors waiting in the wings to spend money in the Western Canada oil and gas sector.

"We think the number is very conservatively $10 billion Cdn that is available to do the transactions," he said.

"The capital has been there almost since this downturn started but we have not seen the deployment of it quite yet because the gateposts are fairly wide between the buyers and the sellers."

Last week, Rising Star Resources, a newly created junior oil and gas producer, announced it had raised $25 million from private equity firms Lex Capital of Regina and 32 Degrees Capital of Calgary.

CEO Steve Sugianto said accessing private equity was the only option for Rising Star which wanted to buy oil-weighted production at a reasonable price -- $30 million -- from Calgary junior Petrus Resources (TSX:PRQ). …

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