When Ninepoint Partners LP bought a nearly 10% stake in Athabasca Oil Corp. in early 2021, crude was around $50 a barrel and shares had plunged into penny-stock territory. Ninepoint acquired a block of shares for 18 Canadian cents each. Canadian oil major Cenovus Energy Inc. has agreed to buy Athabasca for C$12 a share, more than 6,500% above the fund’s purchase price.
“That’s going to be one of the highlights of my career,” said Eric Nuttall, senior portfolio manager with Ninepoint. He believes he’s unlikely to find another case where he can buy such a significant stake from a highly motivated foreign seller. Ninepoint bought 53 million Athabasca shares in January 2021 from Equinor ASA, as part of the Norwegian’s exit from Canadian oil sands.
“I’m equally happy because I think Athabasca is getting fair to full value,” Nuttall said. “But then you take Cenovus, which has the financial and technical capabilities to accelerate development. So it truly is one of these win-wins.” The Ninepoint fund has returned more than 33% compounded annually over the five-year period ended Aug. 31.
The deal comes after a major rally in oil stocks this year. Prime Minister Mark Carney designated a new Canadian oil pipeline a project of “national interest” on Thursday, expediting regulatory approval. “I haven’t been this encouraged for many, many years,” Nuttall said.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing