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Suncor to sell stakes in three Eastern Canadian oilfields to Ithaca
Suncor Energy (TSX: SU) announced on October 4 that it had agreed to sell its stakes in the Terra Nova, White Rose and West White Rose oilfields offshore Eastern Canada to UK-based Ithaca Energy (LON: ITH). The purchase price is CAD1.2bn ($841mn) in upfront cash, plus an additional contingent payment of up to CAD350mn ($245mn), based on future oil prices.
Suncor owns a 48% interest in Terra Nova, a 40% stake in White Rose and 38.6% in West White Rose, all of which are located in the Jeanne d’Arc Basin offshore Newfoundland and Labrador. The company said it would retain its interests in the Hebron and Hibernia oilfields in the same region. However, the sale illustrates that the company is increasingly focusing on its oil sands assets.
“This transaction further focuses our efforts on opportunities that generate the greatest long-term shareholder value,” stated Suncor’s CEO, Rich Kruger. “We are aligning our portfolio around our competitive advantages and the strengths of our unparalleled, physically integrated business, underpinned by large-scale, long-life oil sands resources.”
Ithaca’s executive chairman, Yaniv Friedman, meanwhile, described the transaction as building on his company’s vision for “scale, stability and strength” as it expands into the waters offshore Eastern Canada.
“The transaction delivers on our clear stated growth strategy as we seek to diversify and grow our production and resource base and replicate our success in the United Kingdom Continental Shelf (UKCS) through disciplined international expansion in regions we believe we can create long-term value for our shareholders,” Friedman said. He added that the transaction will add “long-life, low-decline barrels in an offshore operating environment similar to the UKCS”. Ithaca expects this to “materially” enhance its medium-term production outlook while also creating a platform for further growth and consolidation.
Ithaca will assume the operatorship of Terra Nova. White Rose and West White Rose are operated by Cenovus Energy (TSX: CVE).
Ithaca will also assume investment commitments and all future liabilities associated with the assets, which include a CAD500mn ($351mn) regulatory well compliance programme at Terra Nova starting in 2027 and the total estimated abandonment and lease liabilities of CAD1.4bn ($982mn).
Newfoundland and Labrador Energy and Mines Minister Lloyd Parrott was quoted by CBC News this week as saying he believed Ithaca was interested in extending the lifespans of the oilfields and working with other companies, as it is not buying the assets outright.
The transaction is anticipated to close in early 2027.
