A northern Alberta First Nation has made good on pledge to keep fighting an oil sands project proposed by Athabasca Oil Corp., a move that may delay the $1.3-billion sale of the company's interest to its Chinese partner.
The Fort McKay First Nation has filed for permission to appeal the green light given to the Dover Commercial Project by the Alberta Energy Regulator last month.
The native group's contracting businesses have benefited from the expansion of the oil sands sector, whose developments are near its lands. However, Fort McKay disputed the Dover project during a hearing last spring, arguing it should have a 20-kilometre buffer zone to prevent the community from getting boxed in.
The regulatory panel rejected that argument, ruling that excluding reserves as part of a buffer zone would be economically detrimental to the province and municipality and not in the public interest.
In a statement, Athabasca said it had expected Fort McKay's effort to take its case to the Court of Appeal.
However, the company said it expects the approval process to continue. The next steps are an Alberta government order-in-council and final go-ahead from the province's environment ministry, and Athabasca vice-president Andre De Leebeeck said the appeals process can take place at the same time as the regulatory process, so one does not necessarily have to delay the other.
Athabasca is counting on a quick resolution, as it would trigger a 30-day process for its partner, PetroChina, to exercise an option to buy Athabasca's 40-per-cent stake in the project for $1.3-billion. Athabasca would use the proceeds fund its other operations.
Fort McKay's continuing opposition to the project increases the risk of further delays, RBC Dominion Securities analyst Mark Friesen wrote in a note to clients.
"We believe that the best case scenario results in Athabasca receiving the proceeds of the Dover option by late November or December," Mr. Friesen said. "Without receipt of the option proceeds, the company would be unable to fund its 2014 capital program. Management has not articulated any alternative financing options for the 2014 capital budget."
He said he expects the stock to be weak as investors worry about delays. Athabasca closed down 3 cents at $7.42 on the Toronto Stock Exchange on Thursday. The shares are off 12 per cent from a recent high of $8.43 in the days shortly after the AER approval.