Suncor Energy has agreed to purchase an additional 21.3% working interest in the Fort Hills Project and associated sales and logistics agreements from Teck Resources Limited, for consideration of $1 billion. Upon closing, Suncor’s aggregate share in the project will increase to 75.4%. The acquisition will be funded by cash from asset sale processes currently underway and the company remains on track with its previously articulated capital allocation framework.

This transaction sets a current market value for Fort Hills and Suncor will therefore recognize a noncash accounting impairment charge on its existing 54.1% interest of approximately $2.6 billion(1) aftertax in its third quarter results which will be announced on November 2, 2022.

"The acquisition of an additional interest in Fort Hills meets our return objectives, builds upon our strategy to optimize our portfolio around our core operated assets and underscores Suncor’s confidence in the long-term value of the Fort Hills Project. This acquisition is a part of our Base Plant mine replacement strategy,” said Kris Smith, Interim President and Chief Executive Officer.

The new Mining and Upgrading and Fort Hills operating leadership teams have been conducting an indepth review of the Fort Hills Project and have developed and commenced a multi-year performance improvement initiative. This recognizes the medium-term challenges in asset performance and drives the necessary actions focused on optimizing production, operating costs and capital requirements over the long-term. In the next 36 months, Suncor expect lower gross production and increased operating costs per barrel, each impacted by approximately 5% when compared to Suncor’s most recent corporate guidance for 2022, due to physical mine constraints as well as accelerated development of further mine pits for increased sustained long-term production. 

“While the Fort Hills mine has faced challenges in the early years of the mine life, including challenges due to government directed production shut ins, I have full confidence in our current mine plan assembled with fresh external mining perspectives,” continued Smith. “We look forward to discussing our plans for the Project in more detail at our upcoming investor presentation on November 29, 2022.”

With the completion of the purchase agreement, the Fort Hills Energy LP’s partners will include: Suncor and its affiliate (holding an aggregate 75.4% interest) and TotalEnergies EP Canada Ltd. (24.6% interest). Suncor is the operator of the Fort Hills Project through an operating services contract. The Fort Hills Project is located in Alberta’s Athabasca region, 90 kilometres north of Fort McMurray.

The transaction is subject to customary closing conditions, including regulatory approval under the Competition Act and is anticipated to close in the first quarter of 2023.

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