French company TotalEnergies says it has signed a deal to sell its Canadian operations to Suncor Energy Inc. in an agreement worth up to $6.1 billion.
Under the deal, Suncor will pay $5.5 billion in cash, plus up to an additional $600 million that is conditional on Western Canadian Select benchmark oil pricing and certain production targets.
“This transaction represents a major step in securing long-term bitumen supply to our base plant upgraders at a competitive supply cost,” Suncor chief executive Rich Kruger said in statement.
“These are valuable oilsands assets that are a strategic fit for us and add long-term shareholder value.”
TotalEnergies EP Canada Ltd. holds a 31.23 per cent working interest in the Fort Hills oilsands project and a 50 per cent working interest in the Surmont in situ asset.
The agreement means that Suncor will own 100 per cent of Fort Hills.
Surmont is operated by ConocoPhillips Canada which holds the other 50 per cent stake. Under the terms of the Surmont joint venture arrangements ConocoPhillips Canada has certain pre-emptive rights including a right of first refusal on the 50 per cent Surmont working interest.
TotalEnergies had announced last year it planned to exit the Canadian oilsands by spinning off TotalEnergies EP Canada, but said it decided to sell the operations instead after receiving several unsolicited offers including the one by Suncor.
Suncor said the deal will add 135,000 barrels per day of net bitumen production capacity and 2.1 billion barrels of proven and probable reserves to Suncor’s oilsands portfolio.
The Calgary-based company said once the deal closes it intends to increase its quarterly dividend by about 10 per cent.
Companies in this story: (TSX:SU)
This report by The Canadian Press was first published April 27, 2023.
The Canadian Press
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