Athabasca falls on Chinese media report of executive probes


Athabasca falls on Chinese media report of executive probes


CALGARY, Alberta (Bloomberg) -- Athabasca Oil Corp., the Canadian company awaiting a C$1.32 billion ($1.23 billion) payment from PetroChina Co., fell the most in two months after a Chinese newspaper reported that an executive tied to the companies’ partnership is being probed.

Athabasca, based in Calgary, slid 5.5% to close at C$6.70 in Toronto, after earlier dropping 10%, the most intraday since Oct. 18.

Li Zhiming, who previously ran the oil-sands JV between Athabasca and PetroChina and was the CEO of PetroChina’s Canadian unit, was taken away for investigation in China last month, the Beijing-based Caixin magazine reported on its website, citing unidentified sources. Song Yiwu, the deputy manager of overseas exploration and development at China National Petroleum Corp., PetroChina’s parent, also was taken away last week, Caixin said.

“As far as we see, this is little new information,” Phil Skolnick, an analyst at Canaccord Genuity Corp. in New York, said in a note. “There have been multiple arrests in China associated with charges or questioning around corruption.”

Athabasca is depending on the payment from Beijing-based PetroChina to fund drilling, including in the Duvernay shale in Alberta where it’s seeking partners. A put option exercised by Athabasca on April 17 forces PetroChina to buy the 40% it doesn’t own in the undeveloped Dover oil-sands project from the Canadian company, based on a 2010 agreement.

Dover Payment

Matthew Taylor, a spokesman for Athabasca, said by phone that the companies are working to close the deal “in the near term” and he can’t comment on anything related to PetroChina. Mao Zefeng, PetroChina’s Beijing-based spokesman, didn’t answer two calls and an email to his office seeking comment.

Chen Shudong, the incoming director of China National Petroleum’s Canadian unit, said in an email that he doesn’t have any new information about the deal. Chen said in a July 11 email that PetroChina was working with Athabasca to complete the deal and make the Dover payment and predicted it may not take long.

Athabasca, which had a similar agreement with PetroChina for the MacKay River oil-sands project, exercised its option to sell the rest of that JV to the Chinese company in January 2012, and completed the deal two months later.

The investigations follow a probe into Bo Qiliang, the former chief of PetroChina’s international business, Caixin reported.

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