Suncor Energy Inc. agreed to buy TotalEnergies SE’s stake in the Fort Hills oil-sands mine for C$1.47 billion ($1.07 billion) after an earlier deal to buy the French company’s Canadian assets was thwarted 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 addresses a “key uncertainty for the company,” Suncor Chief Executive Officer Rich Kruger said in a statement.
“They get the bitumen feed that they will need post-2030, when their Base Plant runs out,” Phil Skolnick, an analyst at Eight Capital, said in an interview.
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.
TotalEnergies’ exit marks the latest in a string of divestitures by international oil companies from the oil sands. Companies including Shell Plc, BP Plc and Equinor ASA have sold assets in the region to Canadian companies amid an increased focus on cutting emissions.
One recent exception has been ConocoPhillips, which sold some oil-sands sites to Cenovus Energy Inc. in 2017, but held onto its Surmont operation. Suncor, one of the largest players in Canada’s oil sands, agreed in April to buy TotalEnergies’ assets in the region, including its Fort Hills and Surmont stakes, in a roughly $4 billion deal. But that transaction fell apart when ConocoPhillips exercised its right to acquire TotalEnergies’ Surmont stake for as much as $3.33 billion.
On Wednesday, ConocoPhilips announced it completed its purchase of TotalEnergies’ Surmont interest.
(Updates with analyst’s comment in fourth paragraph.)