TotalEnergies Exits Canadian Oilsands, Selling Stakes to Suncor for $5.5 billion

Deal gives Suncor 100% ownership of Fort Hills oilsands project

A crushing unit during a grand opening event for the Suncor Fort Hills oilsands extraction site near Fort McKay, Alberta. TotalEnergies is selling its stake in the operation to Suncor Energy. PHOTO BY BEN NELMS/BLOOMBERG

The deal for Total’s Canadian oil exploration and production business includes the company’s 31 per cent stake in the Fort Hills oilsands mining project and a 50 per cent interest in the Surmont in situ asset.

The company initially planned to spin off the business but said the sale to Suncor would be more straightforward and the price tag was comparable to its own valuations for a listing of the business.

Taking into account the sale, which should close by the end of the third quarter, it plans to distribute at least 40 per cent of the cash flow generated this year to shareholders through a share buyback or special dividend.

TotalEnergies said its first-quarter adjusted net income fell 27 per cent to US$6.5 billion — in line with analyst expectations — due to lower energy prices.

It is sticking with plans for a share buyback of up to US$2 billion in the second quarter, as it did in the first quarter. It also confirmed it expected net investments of US$16-18 billion this year, including US$5 billion for low-carbon energies.After European refining capacity was hampered by French strikes in the first quarter, TotalEnergies anticipates its facilities will ramp back up above 80 per cent.

Margins on refining diesel, however, will drop as Chinese exports increase and energy from Russia finds new buyers to replace the Western purchasers the country relied on until Moscow’s invasion of Ukraine.

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Unlike many peers, TotalEnergies has kept some of its investments in Russia. However, it booked US$14.8 billion worth of impairments on its Russian holdings in 2022.

TotalEnergies said on Thursday it expects its gas production and sales to increase as projects start up in Oman and Norway, and as the Freeport liquefied natural gas export terminal in the United States comes back online.TotalEnergies’ share price was down around 1 per cent in early trade, in line with falls across the sector and relatively weak oil prices.

Analysts said its results were positive, as was the sale of carbon intensive oilsands given investors’ focus on lower carbon energy.

Biraj Borkhataria, head of European energy research at RBC Europe Ltd, said the surprise sale marked “a clean exit” and the expected cash distribution was “a positive signal.