Total sells stake in Alberta oil sands project to Canada's Suncor
By Mike De Souza and Nia Williams
CALGARY, Alberta (Reuters) - French oil company Total, which is trimming exposure to Canada's oil sands amid a slump in crude prices, said on Monday it had sold a tenth of the Fort Hills oil sands project in northern Alberta to Canada's Suncor Energy.
The stake in the planned 180,000 barrel-per-day project was sold to Suncor for around C$310 million (US$233.96 million).
The sale, which is subject to regulatory approval and expected to close by the end of the year, will give Suncor a 50.8 percent stake in Fort Hills. Total will own a 29.2 percent in the project and a third partner, Teck Resources Ltd, owns 20 percent.
Suncor expects to spend an additional C$1 billion on Fort Hills as a result of the deal, including C$700 million in remaining project outlays.
The total C$15 billion cost of Fort Hills is estimated at a capital intensity of approximately $84,000 per flowing barrel of bitumen, according to Suncor. The project will start producing oil in the fourth quarter of 2017.
"We are acquiring an additional 10 percent of a C$15 billion project for C$1 billion," said Suncor spokeswoman Sneh Seetal.
Canada's oil sands are home to the world's third-largest crude reserves but carry some of the highest breakeven costs globally because of the scale of projects and energy-intensive production methods.
As global crude prices plummeted to around $46 a barrel from more than $100 a barrel in June 2014, operating costs have been squeezed up to 25 percent and producers have laid off thousands of workers. Continued...