Calgary-based Suncor Energy will acquire French TotalEnergies’ Canadian operations in a US$4.1-billion deal for the oilsands patch.
For US$4.1 billion in cash and another potential $450 million under a conditional arrangement, Suncor will acquire TotalEnergies EP Canada’s 31.23% interest in Canada’s Fort Hills oilsands project and a 50% working interest in Surmont, which is operated by ConocoPhillips.
Fort Hills is an open-pit mine containing raw oil sands bitumen.
Suncor says the deal will boost its per day production capacity by 135,000 barrels, adding over 2 billion barrels of proven and probable reserves to its portfolio.
Despite the rising costs and operational challenges of the Fort Hill project, along with oil prices that have dropped 20% from last year, Suncor’s stock was trading up 2.42% at $29.99 per share on Thursday at 11:06 a.m. EST. Year-to-date, Suncor is down a slight 0.73%.
“This transaction represents a major step in securing long-term bitumen supply to our base plant upgraders at a competitive supply cost,” Suncor CEO Rich Kruger said in a press release. “These are valuable oilsands assets that are a strategic fit for us and add long-term shareholder value.”
For TotalEnergies, the sale comes as the oil giant reports a decline in first-quarter earnings, with net income down 27% to $6.5 billion. While down for the quarter, the earnings met analyst expectations, Reuters report