Suncor continues Fort Hills deal talks with TotalEnergies

Aug. 15, 2023
Suncor Energy continues to evaluate a deal to acquire remaining Canadian operations from TotalEnergies, including the 31.23% working interest in the Fort Hills oil sands project.

Suncor Energy continues to evaluate a deal to acquire remaining Canadian operations from TotalEnergies, including the 31.23% working interest in the Fort Hills oil sands project.

The company provided a limited update as part of its second-quarter 2023 earnings release on Aug. 14.

In April, Suncor agreed to acquire all shares of TotalEnergies EP Canada Ltd.—holder of the Surmont in situ asset plus 31.23% working interest in the Fort Hills project—for $5.5 billion (Can.) plus additional payment potential up to $600 million (Can.).

That deal, reached after TotalEnergies said it would exit Canadian oil sands, was conditional upon ConocoPhillips waiving its preemptive rights on Surmont, but in June, the operator elected to exercise its right in a $4 billion (Can.) deal that also included contingent payments up to $440 million (Can.) (OGJ Online, June 5, 2023; Apr. 27, 2023).

As a result of ConocoPhillips exercising its right, Suncor and TotalEnergies both hold the right to terminate the agreement, Suncor said at the time, noting it would assess the transaction.

In the company earnings call Aug. 15, Suncor chief executive officer Rich Kruger said deal talks should conclude by yearend, adding that the company’s preference would be to hold 100% ownership of the asset as “that’s generally where we think we can add the most value and be the most competitive.”

Suncor is operator of the Fort Hills asset with 68.76% interest.

Second-quarter 2023

Suncor's adjusted operating earnings for second-quarter 2023 were $1.253 billion (Can.), compared with $3.814 billion (Can.) in the prior year quarter, primarily due to decreased crude oil and refined product realizations, and a first-in, first-out inventory valuation loss in the quarter compared with a gain in the prior year quarter, partially offset by lower royalties and income taxes, the company said.

Suncor's net earnings were $1.879 billion (Can.) in the quarter, compared with $3.996 billion (Can.) in the prior year quarter.

Adjusted funds from operations were $2.655 billion (Can.), compared with $5.345 billion (Can.) in the prior year quarter.