Suncor Energy agreed to buy TotalEnergies' stake in the Fort Hills oil-sands mine for C$1.47-billion after an earlier deal to buy the French company’s Canadian assets was scuttled by ConocoPhillips.
The deal for TotalEnergies’ roughly 31% working interest in Fort Hills would add 61 000 barrels a day of bitumen production capacity and 675 million barrels of reserves, Calgary-based Suncor said Wednesday. The deal is expected to close this year.
For Suncor, the purchase would secure long-term bitumen supplies for the upgraders at its Base Plant, prolonging the operation’s lifespan. The company has been searching for new supplies for the facilities after the Canadian government signaled last year that it might not approve a project to extend the life of the mine that currently feeds them.
“The transaction secures additional long-term bitumen supply to fill our Base Plant upgraders at a competitive supply cost, addressing a key uncertainty for the company and adding long-term shareholder value,” Suncor CEO Rich Kruger said in a statement.
For TotalEnergies, the sale speeds its shift to operations with lower costs and helps fund share buybacks. The company is also ramping up investments in reducing its emissions and generating carbon-free energy.
The move comes after Suncor, one of the largest players in Canada’s oil sands, agreed in April to buy TotalEnergies’ assets in the region, including Fort Hills and the Surmont oil sands site, in a roughly $4-billion deal. But that transaction fell apart when ConocoPhillips exercised its right to acquire TotalEnergies’ 50% stake in the Surmont oil-sands field for as much as $3.33-billion.