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Eastern Canadian LNG backer’s days are numbered as it studies ‘strategic alternatives’

Calgary-based Pieridae Energy, which has been the driving force behind a challenging liquefied natural gas project in eastern Canada for the past decade, could be sold or merged.

The company’s stock, listed in Toronto, was trading at C$0.34 (US$0.27) at close of play on Friday, close to its all-time low and a world away from its mid-2011 peak of almost C$24.

Pieridae has been trying to make the two-train Goldboro LNG project in Nova Scotia fly since 2012, but earlier this month admitted defeat due to cost, schedule and partnering issues, saying that it could not satisfy the conditions to take the final investment decision.

Chief executive Alfred Sorensen on 2 July said that Goldboro LNG in its current guise was “impractical”, and the company’s board would take the scheme in “a new direction” although it did not elaborate.

That announcement also coincided with chief financial officer Rob Dargewitcz quitting the company.

Now it appears that Pieridae’s days could be numbered after it stated on Monday that it is considering “strategic alternatives” — a commonly used euphemism for a sale or merger.

“The company has initiated a formal process to identify, examine and consider a range of strategic alternatives with a view to enhancing shareholder value,” said Pieridae.

“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 added.

At the same time, Pieridae appointed Adam Gray as its interim chief financial officer. He was previously vice president and controller.

The company’s board has authorised the creation of a special committee, chaired by board member Andrew Judson, to review and evaluate potential strategic alternatives and transactions.

“We are taking this step with the focus of ensuring shareholder value is maximised,” said chief executive Sorensen.

The Goldboro LNG facility would have been fed with gas from Pieridae’s extensive resources in the Canadian Foothills play of British Columbia, which also include midstream infrastructure and a proposed carbon capture and storage plant.

These assets currently produce some 215 million cubic feet per day of gas.

Pieridae had lined up US contractor Bechtel to build the LNG facility after an earlier deal with compatriot KBR had fallen through.

Sorensen added: “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.”

Peters & Co has been appointed as a financial advisor and will engage with the special committee about this “comprehensive review and analysis of strategic alternatives”, while legal advice will come from McCarthy Tetrault.

Pieridae said it has not set a definitive schedule to complete its identification, examination and consideration of strategic alternatives, adding that it will not comment on developments related to this process until told to do so by its board.

As a result of the company’s situation, it has decided to defer its planned 12 August second-quarter 2021 investor call.(Copyright)

Source: Upstream | This text was excerpted from the media outlet cited on July 26, 2021 and is provided to Noia members for information purposes only. Any opinion expressed therein is neither attributable to nor endorsed by Noia.