Suncor Energy Inc. will buy Tech Resources Ltd.’s 21.3 percent stake in the Fort Hills oil sands project for about $1 billion, the two companies announced late Wednesday.

The 194,000-barrel-per-day oil sands field north of Fort McMurray, Alta., is currently jointly owned by Suncor, Teck and French company Total Energy EP Canada Ltd.

Upon closing of the deal, Calgary-based Suncor, operator of Fort Hills, will see its stake in the oilsands project increase to 75.4 percent. Total Energy will hold the remaining 24.6 percent stake.

Suncor’s Interim President said, “Acquiring an additional interest in Fort Hills meets our return objectives, builds on our strategy to optimize our portfolio around our core assets and supports the long-term success of the Fort Hills project. underscores Suncor’s confidence in the value,” Suncor interim president and CEO Chris Smith said in a news release.

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The Fort Hills oil sands mine started operations in 2018 but has been facing difficulties.

The mine was brought to full speed by the Alberta government’s move to cut oil production in the province in 2019 to help offset a growing discount to Canadian oil prices due to a lack of pipeline export capacity. Failed to reach capacity.

Then in 2020, one of Fort Hills’ two production trains was shut down due to low oil prices due to the Covid-19 pandemic.

The deal announced Wednesday is based on Fort Hills’ current market value, Suncor said, and as a result, Suncor took a non-cash accounting impairment charge on its existing 54.1 percent interest of about $2.6 billion in its third-quarter results. will admit. Which will be announced on November 2. The company will also hold an investor presentation on November 29.

The Vancouver-based tech said it expects to record a non-cash impairment charge of $950 million in the third quarter of 2023. Tech is scheduled to hold its third-quarter earnings call Thursday morning.

Tech has been saying for some time that it is interested in selling its stake in Fort Hills. The company is currently building a $5 billion copper mine in Chile. He has said he wants to focus on metals and minerals that are essential to a carbon world, including copper, zinc and steelmaking coal.

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“This transaction supports our strategy to drive industry-leading copper growth and balance our portfolio of high-quality assets with low-carbon metals,” Tech CEO Jonathan Price said in a release Wednesday. Further, the company will review the utilization of the proceeds thereof. On sale early 2023.

On Wednesday, Suncor said it had conducted an in-depth review of the Fort Hills project and launched a multi-year “improvement initiative” aimed at increasing mine production and reducing operating costs.

“While the Fort Hills mine has faced challenges in the early years of the mine’s life, including challenges due to government-mandated production shutdowns, I have full confidence in our current mine plan for the new external mining landscape. together,” Smith said.

Suncor said it will finance the transaction with cash from the ongoing asset sale process.

The transaction is subject to regulatory approval and is expected to close in the first quarter of 2023.

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