Ever-increasing demand for oil, along with shrinking numbers of assets for sale in Canadian public auctions, is continuing to heat competition for assets. Producers are paying more than C$70,000 per flowing barrel of oil equivalent (BOE) for properties, according to Calgary-based investment-banking firm Sayers Energy Advisors. "The small amount of publicly announced assets for sale currently on the market, or announced to be on the market in the short term, indicates that buyers will need to be aggressive in order to secure production through acquisitions via the public auction process," says Brent Heinz, vice president with the firm. "Currently only approximately 40,000 BOE of production is publicly available for sale via property and corporate sales." Less daily production has been for sale midyear for the past two years, with 65,000 BOE for sale by the end of June 2005, a shortage compared with the end of June 2004 when there was some 200,000 barrels for sale. Energy trusts previously had an advantage over traditional E&P companies due to their lower cost of capital and strong support in the public market, he says, but the E&Ps have been highly aggressive in the last year, increasing competitiveness through public sales. "This is in part due to many of the junior E&Ps currently trading at similar values in terms of production ($/BOE/d) to the trusts." Two years ago, trusts were paying approximately C$43,000 per producing barrel, while traditional E&P companies paid 80% as much. The trusts paid more than C$50,000 per flowing BOE in 2005; the traditional producers, 88% as much. They each now pay more than C$70,000 per daily BOE. Preemptive bids are becoming commonplace. "In fact, the buyer may be inclined to pay a premium in the hopes of avoiding putting the company in play or providing the seller the incentive to go ahead with a public marketing of the properties."

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