Energy major TotalEnergies said on Thursday it had accepted an offer to sell its Canadian oilsands operations to Suncor Energy Inc for $5.5 billion, with potential additional payments of up to $600 million.
The operations will add 135,000 barrels a day of net bitumen production capacity and 2.1 billion barrels of reserves to Suncor’s oilsands portfolio, the Canadian oil producer said in a statement.
“This transaction represents a major step in securing long-term bitumen supply to our Base Plant upgraders at a competitive supply cost,” said Rich Kruger, Suncor chief executive. “These are valuable oilsands assets that are a strategic fit for us and add long-term shareholder value.”
The deal gives Suncor 100 per cent ownership of Fort Hills, which with other assets, will give the company enough bitumen to fully utilize the Base Plant upgraders “post the end of the Base Mine life in the mid 2030s,” it said.
TotalEnergies initially planned to spin off the business but said the sale to Suncor would be more straightforward and the price tag was comparable to its own valuations for a listing of the business.
Taking into account the sale, which should close by the end of the third quarter, it plans to distribute at least 40 per cent of the cash flow generated this year to shareholders through a share buyback or special dividend.
TotalEnergies said its first-quarter adjusted net income fell 27 per cent to US$6.5 billion — in line with analyst expectations — due to lower energy prices.
It is sticking with plans for a share buyback of up to US$2 billion in the second quarter, as it did in the first quarter. It also confirmed it expected net investments of US$16-18 billion this year, including US$5 billion for low-carbon energies.
Margins on refining diesel, however, will drop as Chinese exports increase and energy from Russia finds new buyers to replace the Western purchasers the country relied on until Moscow’s invasion of Ukraine.
Unlike many peers, TotalEnergies has kept some of its investments in Russia. However, it booked US$14.8 billion worth of impairments on its Russian holdings in 2022.
TotalEnergies said on Thursday it expects its gas production and sales to increase as projects start up in Oman and Norway, and as the Freeport liquefied natural gas export terminal in the United States comes back online.
