ConocoPhillips, Suncor Each Buy a Canadian Oil Sands Asset from TotalEnergies

Researched by Industrial Info Resources (Sugar Land, Texas)--Last week, TotalEnergies SE (NYSE:TTE) (Courbevoie, France) said it finalized the sale of its 50% interest in the Surmont oil sands asset to ConocoPhillips (NYSE:COP) (Houston, Texas), and entered an agreement to sell its stake in the Fort Hills oil sands asset to Suncor Energy (NYSE:SU) (Calgary, Alberta), for a base amount of C$4.03 billion (US$3 billion) and C$1.47 billion (US$1.1 billion), respectively. The transactions also include TotalEnergies' associated midstream commitments.

The Surmont transaction, which also includes up to C$440 million (US$330 million) in contingent payments by ConocoPhillips, has an effective date of April 1, 2023, according to a related press release. ConocoPhillips operates the oil sands asset, located south of Fort McMurray, Alberta, and now will have full ownership. It has a current capacity of 150,000 barrels per day (BBL/d) of bitumen. Subscribers to Industrial Info's Global Market Intelligence (GMI) Production Plant Database can click here for the plant profile.

"Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio," said Ryan Lance, chairman and chief executive officer of ConocoPhillips, in the press release.

Industrial Info is tracking more than $4 billion worth of projects worldwide from ConocoPhillips, more than 40% of which is attributed to projects in the U.S. and Canada. Most of the activity is related to the Willow oil drilling project in Alaska, where ConocoPhillips is the largest crude oil producer and owner of exploration leases. Subscribers to the GMI Production Project Database can click here for a full list of reports for active projects worldwide from the company, and click here for a full list of reports specifically for projects in the U.S. and Canada.

Suncor earlier this year entered an agreement to buy the Surmont stake, but ConocoPhillips had right of first refusal to buy the rest of the asset.

Suncor didn't totally strike out, though, considering it recently entered into an agreement to purchase TotalEnergies' 31.23% interest in the Fort Hills oil sands mining project. After the closing of the transaction, which is expected before the end of the year, Suncor will own 100% of Fort Hills.

Fort Hills, also located near Fort McMurray, has a nameplate capacity of 194,000 BBL/d of bitumen. Industrial Info is tracking a proposed US$4.4 billion expansion, which involves expanding the open pit mine and related processing plants to increase the capacity to 320,000 BBL/d. The project has a "medium" probability (70-80%) of moving forward as planned, according to Industrial Info's Metals & Minerals Project Database, and is expected to kick off next year. Subscribers can click here to read more information.

According to a Suncor press release, the acquisition will add 61,000 BBL/d of net bitumen production capacity and 675 million barrels of proved and probable reserves to the company's existing oil sands portfolio.

For more information on Suncor's oil sands development and the state of oil sands production in Canada, see August 17, 2023, article - Bitumen Producers in Pursuit of Low-Carbon Barrels, and May 26, 2023, article - Report: Canadian Oil Sands Production Could Jump 15% by 2030.

Although TotalEnergies is dispensing of its oil sands assets in Canada, it has its eyes set on other capital investments. "The disposal of our Canadian oil sands assets fits our strategy to focus our allocation of capital to Oil & Gas assets with low breakeven," said Chief Financial Officer Jean-Pierre Sbraire, in the October 4 press release.

Industrial Info is tracking $2.6 billion worth of active projects in North America from TotalEnergies, although most of that activity is attributed to renewable power generation in Texas. Subscribers to the GMI Database can click here for a full list of projects.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).