Suncor Energy, a company based in Calgary, has unveiled a significant change in Newfoundland and Labrador’s offshore oil sector by divesting interests in three oilfields. The company announced on Sunday that it had agreed with Ithaca Energy, a U.K.-based firm, to sell its ownership stakes in Terra Nova (48%), White Rose (40%), and West White Rose (38.6%) offshore assets. The deal includes an upfront cash payment of $1.2 billion and a potential additional payment of up to $350 million tied to future oil prices, as stated by Suncor.
“This transaction allows us to concentrate on ventures that offer the most substantial long-term value for our shareholders,” remarked Rich Kruger, Suncor’s CEO. He added that the move aligns their portfolio with their competitive strengths and the extensive, enduring oil sands resources they possess.
Ithaca will take over the investment obligations and all future responsibilities linked to the assets, such as a $500-million regulatory well compliance program for Terra Nova starting in 2027 and the total estimated abandonment and lease liabilities of $1.4 billion. The effective date of the deal is July 1, with the expected completion in early 2023, subject to closing conditions, regulatory approvals, and partner consents.
While Suncor retains its stakes in N.L.’s Hebron and Hibernia oilfields, Ithaca stated that this acquisition aligns with its growth strategy. Yaniv Friedman, Ithaca’s executive chairman, expressed, “This purchase signifies the next phase of growth for Ithaca Energy as we embark on our first international acquisition in Offshore East Coast Canada.”
Energy and Mines Minister Lloyd Parrott of Newfoundland and Labrador welcomed the development, noting that Suncor’s focus on returning to oil sands in the west had been anticipated. He emphasized Ithaca’s understanding of the local environment due to its experience in the North Sea, highlighting the challenging conditions in the region.
Parrott expressed optimism about the arrival of a major player like Ithaca in Newfoundland, indicating a promising outlook for the province. He stressed that the move sends a positive signal globally and foresees efforts to extend the lifespan of oilfields and foster collaboration with other companies.
Jim Keating, CEO of OilCo, the Crown corporation overseeing oil and gas operations on behalf of the Newfoundland and Labrador government, viewed the acquisition as a vote of confidence for the province’s offshore industry. He mentioned Ithaca’s expertise in late-life field development, echoing optimism for the growth prospects ahead.
Overall, the transaction between Suncor and Ithaca signifies a significant shift in the offshore oil sector in Newfoundland and Labrador, with stakeholders optimistic about the potential benefits and collaborations in the region’s energy landscape.