Calgary-headquartered Suncor Energy has made a significant move in Newfoundland and Labrador’s offshore oil sector by divesting its interests in three oilfields. The company announced on Sunday that it has struck a deal with U.K.-based Ithaca Energy to sell its ownership stakes of 48% in Terra Nova, 40% in White Rose, and 38.6% in West White Rose offshore assets.
The transaction is valued at $1.2 billion in immediate cash payment and an additional contingent payment of up to $350 million, tied to future oil prices, according to the company. Suncor’s CEO, Rich Kruger, stated that the sale aligns with their focus on opportunities that deliver long-term shareholder value by concentrating on their competitive advantages and the strengths of their large-scale oil sands resources.
Ithaca will take over investment commitments and future liabilities associated with the assets, including a regulatory well compliance program at Terra Nova starting in 2027 and estimated abandonment and lease liabilities totaling $1.4 billion. The deal is effective from July 1 and is anticipated to be finalized early next year, subject to meeting closing conditions, regulatory approvals, and partner consents.
While Suncor retains its interests in N.L.’s Hebron and Hibernia oilfields, Ithaca expressed in its own statement that the acquisition aligns with its growth strategy. Ithaca’s executive chairman, Yaniv Friedman, emphasized that the acquisition signifies a new phase of growth for the company as it ventures into Offshore East Coast Canada for the first time.
Newfoundland and Labrador’s Energy and Mines Minister, Lloyd Parrott, hailed the development as positive and emphasized the potential for job creation and extended lifespan of the oilfields with Ithaca’s involvement. Similarly, OilCo CEO Jim Keating highlighted the confidence shown in the province’s offshore sector through the deal and expected Ithaca to bring fresh perspectives and growth strategies to the region.
The transition has been met with optimism in the oil and gas sector, signaling a promising future for Newfoundland and Labrador’s energy industry. The move is seen as a significant step towards diversification and growth in the region, with expectations of long-term value creation for shareholders.