April 15, 2024

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Suncor Vitality (SU.TO) on Wednesday mentioned it will purchase French vitality agency TotalEnergies’ (TTEF.PA) Canadian operations for C$1.47 billion ($1.07 billion) to bolster its bitumen manufacturing capability.

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Suncor will purchase the 31.23% curiosity held by TotalEnergies EP Canada within the Fort Hills oil sands mining undertaking in northern Alberta, its whole possession to 100%.

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“The transaction secures further long-term bitumen provide to fill our Base Plant upgraders at a aggressive provide price, addressing a key uncertainty for the corporate,” Suncor CEO Wealthy Kruger mentioned in a press release.

Calgary-based Suncor has been weighing choices for changing round 200,000 barrels per day of uncooked bitumen provide from Base Mine, its largest oil sands mine, which is about to expire by the mid-2030s.

The mine feeds two Base Plant upgraders that produce roughly 350,000 barrels per day (bpd) of high-value artificial crude and are an important a part of Suncor’s operations.

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The TotalEnergies acquisition will add 61,000 bpd of bitumen manufacturing capability and 675 million barrels of confirmed and possible reserves to Suncor’s current oil sands portfolio.

Suncor had agreed in April to purchase TotalEnergies’ Canadian operations for C$5.5 billion, together with the Fort Hills curiosity and a 50% stake within the Surmont thermal oil sands facility.

Nonetheless, ConocoPhillips (COP.N), which operates Surmont, exercised its proper of first refusal to purchase TotalEnergies’ stake as a substitute of Suncor, triggering a evaluation of Suncor’s complete deal.

Fort Hills, an open-pit mine, has struggled with operational challenges since beginning manufacturing in early 2018. Final 12 months Suncor forecast 5% decrease gross manufacturing and better working prices per barrel at Fort Hills over the following three years because of long-term enchancment plans for the undertaking.

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