Suncor Energy Inc. has agreed to buy TotalEnergies EP Canada Ltd., which has a 31.23 percent stake in the Fort Hills oil sands mining project, for $1.07 billion (C$1.468 billion).
The acquisition adds 61,000 barrels per day (bpd) of net bitumen production capacity and 675 million barrels of proven and probable reserves to Suncor’s existing oil sands portfolio, Suncor said in a news release Wednesday. Regulatory approvals have been received and, subject to closing, the transaction will have an effective date of April 1, the company said.
Fort Hills, which Suncor operates, is a truck and shovel open pit mine located in Alberta’s Athabasca region, 90 kilometers north of Fort McMurray, according to the company’s website. Fort Hills began producing paraffin foam treated bitumen from secondary extraction in early 2018 and has a capacity of 194,000 bpd of bitumen. Its life expectancy is approximately 50 years based on current mine plans.
Upon closing of the transaction, Suncor will own 100 percent of Fort Hills. Together with 100 percent ownership of the Firebag and MacKay River in-situ assets, the acquisition provides the company with an additional long-life, physically integrated bitumen supply to maximize utilization of its wholly-owned base plant upgraders after the end of the base. My life. Suncor’s base plant operation includes two mines and extraction operations north of Fort McMurray in the Regional Municipality of Wood Buffalo.
“The transaction secures additional long-term supply of bitumen to fill our base plant upgraders at a competitive supply cost, addressing a key uncertainty for the company and adding long-term shareholder value,” said Rich Kruger, president and CEO of Suncor. “With 100 percent ownership of Fort Hills, we will seek opportunities to create additional value through regional synergies and basin-wide management of our unmatched integrated tar sands asset base. This transaction is aligned with our strategy to fully own and operate long-lived strategic assets”.
Suncor noted that the additional interest acquired in the asset will be subject to its goal of achieving net zero greenhouse gas emissions from operations by 2050.
In August, Suncor reported net earnings of $1.4 billion (C$1.879 billion) for the second quarter, compared with $2.97 billion (C$3.996 billion) in the year-ago quarter. According to an earlier earnings release, Suncor’s adjusted operating earnings were $0.93 billion (CAD 1.253 billion) in the second quarter, compared with $2.83 billion (CAD 3.814 billion) in the prior quarter previous year, mainly due to “decline in crude oil and refined product”. realizations reflecting a weaker business environment in the current quarter, and a first-in, first-out inventory valuation loss in the current quarter compared to a gain in the prior year quarter, partially offset by reduction of royalties and income taxes”.
The Calgary-based company’s total oil sands bitumen production rose to 814,300 bpd in the second quarter compared to 811,300 bpd in the year-ago quarter, due to lower maintenance activities in the current period, excluding Syncrude, which was impacted by planned turnaround activities. and the company’s increased labor interest in Fort Hills, according to the release.
Suncor said it delivered total production of 741,900 barrels of oil equivalent per day, with strong upgrader utilization outside of planned maintenance activities and continued good performance of in-situ assets. Suncor also completed all major planned annual maintenance at all refineries, resulting in refinery crude throughput of 394,400 bpd.
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