Suncor Energy to Acquire Additional Working Interest in Fort Hills Oil Sands Project


Oil and Gas - Sep 21, 2015

Suncor Energy today announced that it has agreed to purchase an additional 10 per cent working interest in the Fort Hills oil sands project from Total E&P Canada Ltd., for total aggregate consideration of $310 million at the time of announcement. As a result of this transaction, Suncor's incremental capital increase to Fort Hills is estimated at just over $1 billion of which approximately $700 million is remaining project spend. Upon closing, Suncor's partnership share in the $15 billion project will increase to 50.8 per cent.

As part of the transaction, Suncor acquires a further proportionate interest in Fort Hills related logistics, including pipelines, storage terminals and third-party pipeline capacity agreements. The Fort Hills project is located in Alberta's Athabasca region, 90 kilometres north of Fort McMurray.


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"This opportunity to acquire an additional interest at a discounted price underscores Suncor's confidence in its position within the oil sands. We consider this project to be one of the best opportunities for long-term sustainable growth in the industry today, thanks to the exceptional quality of the resource and our disciplined project execution," said Steve Williams, president and chief executive officer. "With engineering over 90 per cent complete and construction surpassing 40 per cent, Fort Hills is on track, with first oil expected in the fourth quarter of 2017. For 2015, this further investment in Fort Hills can be absorbed within our current capital spending guidance."

The acquisition of the additional working interest also presents an opportunity for Suncor to lower its capital cost per barrel and enhance its projected return on the Fort Hills project.

With the completion of the purchase agreement, the Fort Hills Energy LP's partners will include: Suncor (50.8 per cent interest), Total E&P Canada Ltd. (29.2 per cent interest) and Teck Resources Limited (20.0 per cent interest). Suncor is the developer and operator of the Fort Hills project through an operating services contract.

The transaction is subject to closing conditions, including regulatory approval under the Competition Act. Teck has agreed to waive its right of first refusal to purchase a pro-rata share of the offering. The transaction is anticipated to close by the end of the year.

Source : Suncor Energy Inc.

Published on Global Energy World: Sep 21, 2015

 
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