TotalEnergies divests Surmont asset to ConocoPhillips; to sell other Canadian assets to Suncor

5 October 2023

TotalEnergies has completed the sale of its 50% stake in the Surmont oil sands asset and related assets to ConocoPhillips and agreed to sell all the shares held by its Canadian subsidiary to sustainable energy company Suncor

TotalEnergies, through its Canadian subsidiary TotalEnergies EP Canada, has completed the sale of its 50% stake in the Surmont oil sands asset and related assets to ConocoPhillips.

Fort Hills secondary extraction plant. (Credit: Suncor Energy Inc.)

In May this year, TotalEnergies agreed to sell its 50% stake in the Surmont asset to ConocoPhillips for a total consideration of up to C$4.44bn ($3.32bn).

As per the terms of the agreement, TotalEnergies received a cash payment of C$3.7bn ($2.75bn) after adjustments.

The French oil and gas company will also receive up to C$440m ($330m) in contingent payments within a period of five years.

With the acquisition, ConocoPhillips becomes the sole owner and will continue as the operator of the Surmont asset.

ConocoPhillips chairman and CEO Ryan Lance said: “Long-life, low-sustaining capital assets like Surmont play an important role in our deep, durable and diverse low-cost of supply portfolio.

“This transaction enhances our returns-focused value proposition, improves our return on capital employed, lowers our free cash flow breakeven and is expected to deliver significant free cash flow for decades to come.

“We know this asset very well and plan to further optimise it while remaining on track to achieve our GHG emission intensity reduction goals.”

In addition, TotalEnergies has agreed to sell all the shares held by TotalEnergies EP Canada to sustainable energy company Suncor for C$1.47bn ($1.1bn).

Suncor will buy the remaining 31.23% interest in the Fort Hills oil sands mining project and related midstream commitments from TotalEnergies EP Canada, to become the 100% owner.

Fort Hills is an open pit mine that started production in early 2018 and has been struggling with operational challenges since the beginning.

The transaction is expected to be completed before the end of this year.

TotalEnergies chief financial officer Jean-Pierre Sbraire said: “The disposal of our Canadian oil sands assets fits our strategy to focus our allocation of capital to Oil and Gas assets with low breakeven.

“As announced during our Investor Day on September 27th, proceeds from these divestments will be shared with our shareholders through $1.5bn of buybacks in 2023, yielding an expected shareholder distribution of around 44% of our cash flow (CFFO) this year.”

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