Canadian Natural in talks over royalty land sale: sources

Fri Oct 30, 2015 5:22pm EDT
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By John Tilak and Euan Rocha

TORONTO (Reuters) - Canadian Natural Resources Ltd (CNQ.TO: Quote) has discussed spinning off royalty assets with some pension plans and strategic buyers, according to three sources familiar with the situation.

The company, which had said in May it intended to sell the assets this year, has engaged with the Canada Pension Plan Investment Board, Ontario Teachers' Pension Plan and PrairieSky Royalty Ltd PSK.TO, said the sources, who spoke on condition of anonymity as the talks are not public.

The move comes about four months after Cenovus Energy Inc (CVE.TO: Quote) agreed to sell its royalty lands to Ontario Teachers' for C$3.3 billion and more than a year after Canada's largest natural gas producer Encana Corporation (ECA.TO: Quote) spun off its royalty assets though PrairieSky.

PrairieSky and Teachers were not immediately reachable for comment. Canadian Natural and CPPIB declined to comment.

Shares in Canadian Natural closed up less than 1 percent at C$23.17 on Friday.

Analysts estimate the value of the assets range from C$1 billion to C$2.5 billion.

Canadian Natural, the country's second-largest oil and gas producer, is keen on ensuring that it gets cash, and not equity, the sources said.

"The good thing is that they're not motivated sellers like some others. Unlike other sellers they are in a strong position, and can wait for the right window, or price," said one source, adding that it is going to be "very difficult" for Canadian Natural to get the valuation that Cenovus got on their lands.   Continued...

Facilities at Canadian Natural Resources Limited's (CNRL) Primrose Lake oil sands project is seen near Cold Lake, Alberta August 8, 2013.  REUTERS/Dan Riedlhuber