Calgary-headquartered Suncor Energy has unveiled changes in Newfoundland and Labrador’s offshore oil sector by announcing the divestment of interests in three oilfields. In a recent announcement, the energy company from Calgary revealed a deal with U.K.-based Ithaca Energy to sell its 48% stake in Terra Nova, 40% stake in White Rose, and 38.6% stake in West White Rose offshore assets. The transaction involves an upfront cash payment of $1.2 billion along with a potential additional payment of up to $350 million based on future oil prices.
Suncor’s CEO Rich Kruger stated in the announcement, “This transaction allows us to focus on endeavors that deliver the most significant long-term value for our shareholders.” He emphasized aligning the company’s portfolio with its competitive advantages and the strengths of its extensive, integrated business centered around large-scale, enduring oil sands resources.
According to the disclosure, Ithaca will take on the investment commitments and future liabilities associated with the assets, including a $500-million regulatory well compliance program for Terra Nova starting in 2027 and estimated abandonment and lease liabilities totaling $1.4 billion. The effective date of the transaction is July 1, and it is anticipated to conclude early in the upcoming year, subject to meeting closing conditions, regulatory approvals, and partner consents.
Suncor confirmed that it will retain its interest in N.L.’s oilfields Hebron and Hibernia. Ithaca also expressed its enthusiasm for the acquisition, describing it as a strategic move aligned with its growth strategy to diversify and expand its production and resource base, reflecting its success in the U.K. Continental Shelf and its intention to create long-term shareholder value through disciplined international expansion.
The Minister of Energy and Mines for Newfoundland and Labrador, Lloyd Parrott, hailed the development as positive, noting that Suncor’s shift back to the oil sands in the west was anticipated. He expressed optimism about the prospects brought by Ithaca’s entry, highlighting the company’s experience in challenging environments akin to the province’s conditions.
Parrott assured that Ithaca’s interest lies in extending the lifespan of the oilfields and collaborating with other entities rather than outright acquisition, emphasizing that the company values the expertise of local workers. He emphasized that the deal is not expected to result in job losses but instead may lead to job growth.
The Chief Executive Officer of OilCo, Jim Keating, viewed the deal as a vote of confidence in the province’s offshore sector, highlighting Ithaca’s expertise in late-life field development. Keating welcomed the potential infusion of new ideas and risk appetite that a new player like Ithaca could bring to the region.
The move sparked interest from Liberal energy critic Fred Hutton, who acknowledged the industry’s fluid nature and the significance of the deal’s impact on jobs. Hutton emphasized the importance of monitoring the situation and potential repercussions for employment in the oil sector in the province.
Overall, the transaction between Suncor and Ithaca signals a significant shift in Newfoundland and Labrador’s offshore oil industry, with stakeholders expressing optimism about the future prospects and economic impact of the deal.