CALGARY - SilverBirch Energy Corp., the junior oil sands company made up of a handful of assets Total SA cast aside when it bought UTS Energy Corp., believes it can avoid a takeover because so much of its stock is controlled by two institutional investors.
Howard Lutley, the company's chief executive, said the Children's Investment Fund Management (UK) LLP owns more than 19% of SilverBirch, and Toronto's West Face Capital Corp.'s position is around 17%. Add the shares owned by SilverBirch's board and management and roughly 40% of its stock is under the control of insiders.
"That gives us an amount of stability," Mr. Lutley said yesterday. "Certainly it gives us a certain amount of protection against a lowball offer."
The company, however, will eventually have to make decisions that could mirror UTS' path. SilverBirch owns a 50% stake in the Frontier and Equinox mining projects, which are operated by Teck Resources Ltd. It also owns 100% of two leases, 418 and 271, which are potential steam-assisted gravity drainage (SAGD) projects.
Mr. Lutley expects Silver-Birch and Teck to file regulatory documents for the mining projects near the end of next summer. Frontier and Equinox would not produce oil until 2020, he predicted. Leases 418 and 271, which are in the early stages of exploration, could be developed faster.
SilverBirch is too small to proceed on both the mining projects and the SAGD effort. "It would be [financially] tight to do both at the same time. It would be quite difficult," Mr. Lutely said.
It could follow UTS' strategy, which was to fund its participation in the undeveloped Fort Hills mine by farm-in agreements with richer partners.
"It is certainly something for consideration for the mining project because ... realistically a company of our size, without a strategic partner or some other mechanism, would not realistically be able to go forward with [Frontier and Equinox]," he said. "That's where the logic of strategic partnering or farming down makes sense.
"On the in-situ side, should we find a viable resource over there, it would be well within our means to put together a team to execute that."
SilverBirch trades on the Venture Exchange, the Toronto Stock Exchange's junior board. It was created when Total bought UTS, but spun out all of UTS' assets, save for Fort Hills.
UTS investors received $3.08 in cash and 0.1 Silver-Birch shares for each UTS share. The Total-UTS takeover closed last week.
ctait@nationalpost.com