Canada’s Pieridae Energy launches strategic review
Less than a week after the Quebec government rejected the 11mn mt/yr Energie Saguenay LNG project, Pieridae Energy on July 26 sounded what could be the death knell for what is left of eastern Canada’s natural gas export aspirations, the 10mn mt/yr Goldboro LNG project in Nova Scotia.
The company’s board of directors has created a special committee, chaired by independent board member Andrew Judson, to lead a formal process that will identify, examine and consider a range of strategic alternatives to enhance shareholder value.
|
Advertisement: The National Gas Company of Trinidad and Tobago Limited (NGC) NGC’s HSSE strategy is reflective and supportive of the organisational vision to become a leader in the global energy business. |
“Such strategic alternatives may include, but are not limited to, a corporate sale, merger, a sale of a material portion of Pieridae’s assets or other transactions,” it said.
Earlier this month, Pieridae said it would examine “strategic alternatives” for Goldboro after it failed to make a final investment decision (FID) by June 30 on the estimated C$9bn (US$7.2bn) project, citing cost pressures and time constraints related to Covid-19. Pieridae’s LNG sale and purchase agreement with Germany’s Uniper for the full output from the terminal’s first 5mn-mt liquefaction train included a June 30 FID deadline.
“We are taking this step with the focus of ensuring shareholder value is maximised,” Pieridae CEO Alfred Sorensen said. “Shareholders and the company have invested heavily in the Goldboro LNG project for a number of years and we have acquired and consolidated a large base of Foothills upstream assets, so it is prudent for us to look for ways to ensure an appropriate return is found for the investments made to date.”
At the end of May, Bechtel, Pieridae’s EPC contractor, provided a lump sum turnkey (LSTK) engineering, procurement, construction and commissioning (EPCC) contract price, but Pieridae has not yet revealed details of that estimate. It has also been seeking a C$950mn investment from the federal government to advance the project.
Its 2021 capital budget included a pre-development capital budget for Goldboro of C$10-15mn, half for third-party due diligence work and pipeline engineering analysis and half to Bechtel for the LSTK estimate.
And in October 2019, it closed its C$190mn acquisition of all of Shell Canada’s midstream and upstream assets in the southern Foothills region of Alberta, giving it adequate potential natural gas resources to fill the first train at Goldboro for at least 20 years.
Calgary-based investment banker Peters & Co has been retained as advisor to the special committee, while law firm McCarthy Tetrault will also advise the committee.
Pieridae also said July 26 it had named Adam Gray its interim CFO, replacing Rob Dargewitcz, who will leave the company July 30 to pursue other opportunities. Gray joined Pieridae in January 2020 as vice president and controller.