- Suncor Energy Inc SU announced the acquisition of Canadian operations of TotalEnergies SE TTE for CA$5.5 billion.
- The deal also includes probable additional aggregate maximum payments of up to CA$600 million, subject to Western Canadian Select benchmark pricing and specific production targets.
- The acquisition will expand Suncor's oil sands portfolio capacity by adding 135,000 barrels per day of bitumen production capacity and 2.1 billion barrels of reserves.
- The transaction, expected to close in the third quarter of 2023, includes the remaining working interest of 31.23% in Fort Hills and 50% working interest in Surmont assets.
- Post-acquisition completion, Suncor will have full ownership of Fort Hills. The asset, coupled with Firebag and MacKay River in situ assets, will offer Suncor a life-long integrated bitumen supply in the Fort McMurray region, paving the way for full utilization of the Base Plant upgraders, following the end of the Base Mine life in the mid-2030s.
- The Surmont in situ project is presently operated by ConocoPhillips COP ConocoPhillips Canada and post acquisition, both Suncor and ConocoPhillips Canada will hold a 50% working interest in the asset.
- Suncor funded the acquisition by debt, with net debts expected to temporarily exceed the company's CA$12 billion-CA$15 billion target range.
- Dividend Increase: Following the closure of the acquisition, Suncor's Board of Directors plans to raise the quarterly dividend by around 10%.
- "This transaction represents a major step in securing long-term bitumen supply to our Base Plant upgraders at a competitive supply cost. These are valuable oil sands assets that are a strategic fit for us and add long-term shareholder value. The acquisition also introduces flexibility and optionality into our long-range capital plan, providing us with further discretion in respect of the timing and scope of future oil sands developments," said Rich Kruger, President and CEO of Suncor.
- Price Action: SU shares closed lower by 1.98% at $29.28 on Wednesday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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