CALGARY, Alberta (Reuters) - Investors in Connacher Oil & Gas Ltd CLL.TO are turning up the pressure on the oil sands producer to begin a formal sales process, saying plans to find a partner to keep operating as a stand-alone enterprise won't add enough value.
The moves come four days after Connacher said it had been approached by an unnamed suitor, word of which pushed the share price up by as much as 50 percent. Previously the shares had been pressured by concern over the company's high debt.
Audley Capital Advisors LLP, a British investment adviser that describes itself as a significant investor in Connacher, on Monday was the latest to go public with its contention that selling in the aftermath of last week's proposal is the best way to realize value. It said that it was not alone among shareholders with this view.
The company's stock fell 4 Canadian cents, or 4 percent, to 90 Canadian cents on the Toronto Stock Exchange on Monday.
Audley said it believes the assets to be worth more than the current share value and that the scope of Connacher's plans to find a joint venture partner for its non-producing Great Divide oil sands assets in Alberta is too narrow.
Connacher said in August it had retained Rothschilds to help it find a partner for the properties.
"In order to maximize your chances of success, the scope of the investment banking mandate should be expanded to include a sale of the company," Audley executives Julian Treger and Mathieu Philippe wrote in a December 9 letter to Connacher Chief Executive Dick Gusella, which was seen by Reuters.
"Participants in the JV process should be relieved from the standstill agreement which currently prevents them from making an offer for all of the outstanding shares of the company."
Treger and Philippe requested a conference call with the company's board.
Another activist investor, West Face Capital Inc, said in a news release last week that Connacher should undertake a comprehensive review of all strategic alternatives to boost value for shareholders.
Gusella, a Canadian oil patch veteran, said he could not respond directly to the demands of the investors at this point.
"The easiest thing I could say is that it's easy to have opinions when you don't have any related liability," he told Reuters. "We're working through our process as we are wont to do in circumstances like this and when we're in a position to further communicate events, we'll provide the necessary disclosure."
Following years of industry consolidation, Connacher is Canada's last independent mid-sized oil sands developer. But the company's debt levels climbed as it developed its Pod One and Algar steam-assisted bitumen projects.
Late last month, it announced the sale of some assets to boost its cash position to C$120.3 million ($117.4 million), which the company said gave it confidence it would meet 2012 obligations.
Then last week it revealed it had been approached about a buyout, but cautioned that the proposal was conditional on due diligence, negotiation of all definitive documentation and approval of the boards of the companies.
Reporting by Jeffrey Jones; editing by Rob Wilson