May 16, 2019
Calgary partner Stephanie Stimpson weighed in on the US$38 billion takeover of Anadarko Petroleum Corp. and the “frigid” market for Canadian energy deals in an article by BNN Bloomberg, saying “[t]he deals freeze in Canada can be traced largely to the country’s inability to get new pipelines built.”
According to Stephanie, the lack of new pipeline infrastructure “has weighed on local heavy crude prices.”
“That pipeline pinch prompted Alberta’s government to implement an unprecedented production curtailment late last year, adding another layer of unpredictability that’s making companies hesitant to pull the trigger on deals,” she said.
“There’s been so much volatility and uncertainty that parties have gone on hold.”
Stephanie also detailed an example of this uncertainty—Husky Energy Inc. abandoning its hostile $3.3 billion bid for rival oil-sands producer MEG Energy Corp., citing uncertainty created by the curtailment and the lack of progress on new pipelines.
“With the curtailment program still in effect and no new pipelines expected to be built this year, there’s little indication the market will market will improve in the near term,” she said.
Stephanie pointed out “buyers don’t want to over-bet on those positive catalysts happening, and sellers don’t want to sell at the inopportune time, right before things get better.”