Private equity-backed heavy oil producer Serafina Energy is looking at a possible sale of the company, figuring that high crude prices will boost its value, sources familiar with the matter told Reuters.
The company could fetch over C$1 billion ($782 million) if a sale happens at current commodity prices, one of the sources said. Serafina, whose assets are in the province of Saskatchewan, produced 24,400 barrels of oil per day in 2021, according to the Saskatchewan government.
Serafina’s private equity owners Pine Brook Partners and Camcor Partners are seeking to exit their investment made in 2014, and have reached out to potential buyers to gauge interest, the sources said.
The buyout firms have not made a final decision on the sale and they could still hold on to the company, they added. Private equity firms generally exit investments within three to five years.
The sources requested anonymity as the discussions are private. Serafina, Pine Brook and Camcor did not respond to requests for comment.
North American benchmark crude prices rallied to nearly 14-year highs following Russia’s invasion of Ukraine. This has encouraged private backers of energy companies to exit their investments after years of weak commodity prices forced them to hold oil-related investments longer than they would have liked.
North American oil prices remain elevated but have declined 27% since March 7 as Russia and Ukraine have held ceasefire talks. Some bankers have said this extreme volatility makes it hard for buyers and sellers to strike oil sector deals.
The sources said Waterous Energy Fund, an acquisitive Canadian private equity firm, was evaluating a bid for Serafina.
Adam Waterous, Waterous’s CEO, said he thinks Serafina may be sold, but would not say if Waterous was negotiating to buy the company.
“If something happens with that target, whether it’s with us or someone else, my prediction is it’s months away, not weeks,” Waterous told Reuters, declining to say why he thinks a deal may take time.
Waterous-owned Strathcona Resources on Monday said it had acquired private oil producer Caltex Resources as well as the Tucker oil facility in Alberta. Some of Strathcona’s facilities are in the same area of western Saskatchewan as Serafina’s.
Serafina uses steam to extract crude at its facilities near North Battleford, Saskatchewan. Financial data for the company is not publicly available.
Serafina would be one of the biggest privately owned Canadian oil companies up for sale. Private operators Karve Energy, Mancal Energy and Allied Energy are among those searching for buyers of their assets, and bigger producers Repsol and Imperial Oil are also exploring asset sales.