CALGARY, Alberta, April 16 (Reuters) - Shares in Athabasca Oil Sands Corp sank 5 percent on Friday, extending a string of losses that have tarnished Canada's biggest initial public offering in years.
Athabasca, which is developing a pair of Alberta oil sands projects in a venture with PetroChina, fell 75 Canadian cents to close at C$13.85 on the Toronto Stock Exchange, representing a drop of 23 percent since the IPO closed on April 8.
The offering was worth at least C$1.35 billion ($1.34 billion), and that could rise to C$1.5 billion if underwriters exercise the full overallotment option.
That value would be double the initial estimate of the deal a month before the offering closed, and some analysts said in late March that the increase was an indication that investor appetite for oil sands-related deals had recovered from the economic meltdown.
However, shares in Athabasca have fallen all but one day since the IPO, which was handled by a syndicate of underwriters that comprised numerous independent dealers and just one owned by a big Canadian bank, TD Securities.
That may have led to a dearth of prospective long-term buyers for the stock and a big initial influx of hedge funds, the Globe and Mail reported on Friday, quoting rival dealers.
Many may have bailed when the shares sank in the early days, it said.
However, investors who bought into Athabasca as a start-up venture four years ago at C$1 a share are likely happy to take profits, even at the current level, said Alan Tambosso, president of Sayer Energy Advisors in Calgary.
He does not see the falling stock price as a knock on the oil sands, as industry interest remains high. Indeed, China's Sinopec agreed this week to buy ConocoPhillips' 9 percent stake in Syncrude Canada for $4.65 billion.
'Who buys shares at C$18 to sell them at C$13.50?' Tambosso said. 'People who sell them at C$13.50 are people who got them at less than that, or have held them for a long time and are tired of it.
'If I got them at a buck, I don't care if it's C$12, C$14, C$16 or C$18 -- when I get out, I'm happy as hell.'
Creststreet Asset Management said this week that some of its funds started buying shares in Athabasca at C$1 in 2006 and that the oil sands developer remains the largest holding in some of them.
There has been fear that Athabasca's poor initial stock performance could chill the IPO market, but another high-profile company said on Friday it was going public.
Porter Aviation Holdings Inc filed for an IPO led by RBC Capital Markets as the Toronto-based airline looks to challenge bigger rivals such as Air Canada and WestJet .
Other oil sands developers have discussed the possibility of IPOs as well.
($1=$1.01 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson) Keywords: ATHABASCA/SHARES (jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Athabasca, which is developing a pair of Alberta oil sands projects in a venture with PetroChina, fell 75 Canadian cents to close at C$13.85 on the Toronto Stock Exchange, representing a drop of 23 percent since the IPO closed on April 8.
The offering was worth at least C$1.35 billion ($1.34 billion), and that could rise to C$1.5 billion if underwriters exercise the full overallotment option.
That value would be double the initial estimate of the deal a month before the offering closed, and some analysts said in late March that the increase was an indication that investor appetite for oil sands-related deals had recovered from the economic meltdown.
However, shares in Athabasca have fallen all but one day since the IPO, which was handled by a syndicate of underwriters that comprised numerous independent dealers and just one owned by a big Canadian bank, TD Securities.
That may have led to a dearth of prospective long-term buyers for the stock and a big initial influx of hedge funds, the Globe and Mail reported on Friday, quoting rival dealers.
Many may have bailed when the shares sank in the early days, it said.
However, investors who bought into Athabasca as a start-up venture four years ago at C$1 a share are likely happy to take profits, even at the current level, said Alan Tambosso, president of Sayer Energy Advisors in Calgary.
He does not see the falling stock price as a knock on the oil sands, as industry interest remains high. Indeed, China's Sinopec agreed this week to buy ConocoPhillips' 9 percent stake in Syncrude Canada for $4.65 billion.
'Who buys shares at C$18 to sell them at C$13.50?' Tambosso said. 'People who sell them at C$13.50 are people who got them at less than that, or have held them for a long time and are tired of it.
'If I got them at a buck, I don't care if it's C$12, C$14, C$16 or C$18 -- when I get out, I'm happy as hell.'
Creststreet Asset Management said this week that some of its funds started buying shares in Athabasca at C$1 in 2006 and that the oil sands developer remains the largest holding in some of them.
There has been fear that Athabasca's poor initial stock performance could chill the IPO market, but another high-profile company said on Friday it was going public.
Porter Aviation Holdings Inc filed for an IPO led by RBC Capital Markets as the Toronto-based airline looks to challenge bigger rivals such as Air Canada and WestJet .
Other oil sands developers have discussed the possibility of IPOs as well.
($1=$1.01 Canadian)
(Reporting by Jeffrey Jones; editing by Rob Wilson) Keywords: ATHABASCA/SHARES (jeff.jones@thomsonreuters.com; +1 403 531 1624; Reuters Messaging: jeff.jones.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.