On January 3, Canadian crude producer Athabasca Oil Sands Corp. announced it sold its remaining 40% interest in the MacKay River oil sands project to Cretaceous Oilsands Holdings Ltd., a wholly owned subsidiary of PetroChina International Investment Ltd.

The $680 million (Cdn.) deal, according to OGFJ’s sister publication Oil & Gas Journal, marks the first time a Chinese firm will wholly own a Canadian oil sands project.

In late 2009, PetroChina bought a 60% stake in the project for $1.9 billion (Can.). The February 10, 2010 Put/Call Option Agreement between Cretaceous and Athabasca granted the option to trigger the recent 40% sale.

As a result of the sale of its MacKay River interest, Athabasca’s 2012 capital budget will be reduced by approximately $190 million.

The board of directors of Athabasca decided to proceed with this divestiture because it believes the long-term prospects of the company are enhanced by deploying its capital and resources into its other development projects.

Sveinung Svarte, president and CEO says, “Since creating the joint venture with Cretaceous in February, 2010 and until our exercise of the put option, Athabasca has grown and diversified. We added approximately three billion barrels of contingent resource (best estimate) through successful drilling and acquisitions, reaching approximately 10 billion barrels of contingent resources (best estimate).”

Bill Gallacher, chair of the board says, “Our strategy is to ultimately achieve approximately 50% of our production from the company’s oil sands division and the balance from the light oil division. We will use the proceeds from the option exercise to implement this strategy.”

Ultimately, the MacKay River project in northern Alberta is expected to produce as much as 150,000 barrels a day.

The deal is subject to closing adjustments including Athabasca’s repayment of two loans provided by Cretaceous.