
TotalEnergies EP Canada Ltd has finalised the sale to ConoccoPhillips of its 50 per cent interest in the Surmont oil sands asset and associated midstream commitments.
The transaction, for a base amount of C$4.03 billion including up to C$440 million in contingent payments, has an effective date of 1 April 2023.
TotalEnergies has received a cash payment at closing of C$3.7 billion, which includes adjustments.
According to the current WCS (Western Canadian Select) prices and production levels, TotalEnergies would receive the entirety of the contingent payments within a year.
Surmont is located in the Athabasca region of northeastern Alberta and its resources are produced using SAGD technology. SAGD involves injection of steam into the reservoir, effectively liquefying the heavy bitumen, which then is recovered and pumped to the surface for further processing.
In November 2021, ConocoPhillips Canada joined the Pathways Alliance, which has a goal to achieve net zero GHG emissions from oil sands operations by 2050 to help Canada meet its climate goals, including the country’s Paris Agreement commitments and 2050 net zero aspirations.
TotalEnergies has also signed an agreement to sell to Suncor the entirety of the shares of TotalEnergies EP Canada Limited, which comprises of its participation in the Fort Hills oil sands asset and associated midstream commitments.
Fort Hills began producing paraffinic froth-treated bitumen from secondary extraction in early 2018 and has a nameplate capacity of 194,000 bpd of bitumen. Its life expectancy is approximately 50 years.
TotalEnergies CFO 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 $1.5 billion of buybacks in 2023, yielding an expected shareholder distribution of around 44 per cent of our cash flow (CFFO) this year.”
The consideration for this transaction is C$1.47 billion and closing is expected before the end of 2023.