Suncor Energy finalizes deal to acquire Fort Hills oil sands assets from TotalEnergies

Suncor Energy, Calgary, has agreed to purchase TotalEnergies EP Canada Ltd., which holds a 31.23% working interest in the Fort Hills oil sands mining project and associated midstream commitments, for $1.468 billion (Can.) (US$1.1 billion).

The acquisition adds 61,000 b/d of net bitumen production capacity and 675 million bbl of proved and probable reserves to Suncor’s existing oil sands portfolio.

For months, the companies had been evaluating what remained of a previous deal Suncor struck with TotalEnergies in which Suncor would have acquired the Fort Hills asset interest plus Surmont in situ assets.

That particular deal was halted by a preemption right to TotalEnergies’ 50% interest in Surmont exercised by ConocoPhillips in June for $4 billion (Can.) (US$3.0 billion) plus contingent payments (OGJ Online, June 5, 2023; Apr. 27, 2023). The deal between ConocoPhillips and TotalEnergies closed today, Oct. 4. ConocoPhillips now owns 100% of Surmont and will continue as operator.

During an earnings call in August, Suncor president and chief executive officer Rich Kruger noted Suncor’s preference would be to hold assets at 100% ownership (OGJ Online, Aug. 15, 2023).

With the new deal struck for TotalEnergies EP Canada, Kruger reiterated the benefits.

“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,” he said.

“With 100% ownership of Fort Hills we will pursue opportunities to create additional value through regional synergies and basinwide management of our unparalleled, integrated oil sands asset base.”

Upon closing of the deal, expected before end-2023, Suncor will own 100% of Fort Hills, which along with its 100% ownership of Firebag and MacKay River in-situ assets, provides the company with additional long-life, physically integrated bitumen supply to maximize the utilization of its wholly owned Base Plant upgraders post the end of the Base Mine life.