MOSCOW (MRC) -- ConocoPhillips said on Friday it was buying the 50% stake in the Surmont oil facility held by TotalEnergies' Canadian subsidiary for about USD3 B, giving it full ownership and elbowing away rival Suncor Energy, said Hydrocarbonprocessing.
Canada's Alberta oil sands hold some of the world's largest crude reserves, which appeal to cash-flush producers looking to bolster production.
Suncor last month agreed to buy TotalEnergies’ Canadian operations for USD4.11 B, including Total's 50% stake in Surmont, which ConocoPhillips operates.
But ConocoPhillips, which held the other 50% stake, held right of first refusal to buy the rest of Surmont. Conoco's decision to exercise that right is a setback to Suncor's plans to boost its long-term bitumen supplies to replace its aging Base Mine.
Suncor, in a statement, said its deal with Total was conditional on ConocoPhillips waiving its right of first refusal, and it is now re-assessing the transaction. Conoco's pending decision had stirred speculation about whether it would exercise its option, but investors seemed to favor buying Surmont, given its returns, RBC Capital Markets said in a note.
Conoco shares eased, while Suncor stock was down 1.3%. ConocoPhillips expects the transaction to add about $600 MM of annual free cash flow in 2024.
The deal, expected to close in the second half of 2023, will be funded either through cash, short- and medium-term financing, or a combination, ConocoPhillips said.
We remind, ConocoPhillips posted significantly lower earnings in 1Q 2023 than in 1Q 2022 because because of declining oil prices, but still surpassed analysts' projections. The US firm announced a net profit of USD2.9 bn, a decline from USD5.8 bn in 1Q 2022. Earnings stood at USD2.38/share, an increase from USD4.39/share in 1Q 2022.