National Post

Investors in Norway have shale gas pains
National Post

Opponents of drilling Quebec’s Utica shale natural gas play are stepping up calls for a moratorium at environmental hearings, but it’s investors 5,500 kilometres away who have taken the biggest financial drubbing as the debate over shale gas rages.

Five of Norway’s leading investment banks have written to Quebec’s Bureau d’audiences publiques sur l’environment, expressing concern that their clients’ stakes in Questerre Energy Corp. are taking a bath because of regulatory uncertainty.

A bet on Questerre is a bet that the Utica shale will live up to its estimated potential and yield up to 69 trillion cubic feet of natural gas, more than enough to power every house in the province for a century. Questerre has raised US$250-million in equity over the past five years, most of it from Norwegian capital markets.

The Norwegians are upset that Questerre shares trading on the Oslo stock exchange have tanked about 36% since Sept. 30, about the time the Quebec government’s environmental review began. And they’re warning that any prolonged regulatory uncertainty could threaten financing of other shale gas companies in the province.

“Norwegian investors are disappointed and discouraged, as their significant investments have been made assuming that Quebec enjoyed a stable fiscal and regulatory regime,” Henrik Tangen, director of Norwegian investment bank SEB Enskilda. Arild Andresen, assistant director of corporate finance at Oslo-based First Securities AS, said the damage to future investment in Quebec of a moratorium would linger long after it was enacted. “It would lead to investors questioning the future stability of the regulatory framework.”