Suncor Energy has agreed to purchase an additional 10% working interest in the Fort Hills oil sands project from Total E&P Canada Ltd. for $310 million. As a result of this transaction, Suncor’s incremental capital increase to Fort Hills is estimated at a little more than $1 billion of which approximately $700 million is remaining project spend. Suncor’s partnership share in the $15 billion project will increase to 50.8%.
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 km north of Fort McMurray.
“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 CEO, Suncor Energy. “With engineering over 90% complete and construction surpassing 40%, Fort Hills is on track, with first oil expected in the fourth quarter of 2017.”
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.
Once the transaction is complete, the Fort Hills Energy LP’s partners will include: Suncor (50.8% interest), Total E&P Canada Ltd. (29.2% interest) and Teck Resources Ltd. (20% interest). Suncor is the developer and operator of the Fort Hills project through an operating services contract.