Workers walk through the Sunrise Energy Project, in the Canadian oil sands in northern Alberta, Canada. Operations started at the Sunrise Phase 1 in-situ oil sands project in December 2014. (Source: BP Plc)
BP Plc agreed on June 13 to exit the Canadian oil sands in an asset swap with Cenovus Energy Inc. potentially worth up to CA$1.2 billion.
“This is an important step in our plans to create a more focused, resilient and competitive business in Canada,” Starlee Sykes, BP senior vice president, Gulf of Mexico and Canada, commented in a company release.
On June 13, BP said it will sell its 50% nonoperated interest in the Sunrise oil sands project in an agreement reached with Calgary, Alberta-based Cenovus Energy.
Total consideration for the transaction includes CA$600 million in cash, a contingent payment with a maximum aggregate value of CA$600 million expiring after two years, and Cenovus’s 35% position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador.
“Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador,” Sykes added. “Along with BP’s active Canadian marketing and trading business, this will position BP Canada for strong future growth.”
BP currently holds an interest in six exploration licenses in the offshore Eastern Newfoundland Region. The swap transaction has an effective date of May 1, and is anticipated to close in the third quarter.
Analysts with Tudor, Pickering, Holt & Co. (TPH) noted the swap transaction with Cenvous gives BP an additional six exploration licenses in the eastern Newfoundland region in the Orphan Basin where an exploration well called Ephesus is planned for 2023.
“The transaction furthers the company’s noncore divestiture efforts, while shifting focus in the Canadian portfolio towards potential growth opportunities in Atlantic Canada,” TPH’s Matt Murphy wrote in a June 13 research note.
Cenovus currently operates Sunrise and owns 50% of the asset through the Sunrise Oil Sands Partnership, with BP. The Sunrise Oil Sands asset has been operated by Cenovus since the beginning of 2021, following the Husky Energy transaction.
On strip pricing, Murphy said TPH carried a NAV of roughly CA$3.3B for Cenovus’s 50% operated interest in the project.
Current production from the Sunrise Oil Sands asset is approximately 50,000 bbl/d. The company expects to achieve nameplate capacity of 60,000 bbls/d through a multiyear development program.
Cenovus is now in the early stages of applying its oil sands operating model at the Sunrise Oil Sands asset, according to a June 13 release.
“Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimization opportunities available,” Alex Pourbaix, Cenovus’ president and CEO, commented in the release.
“By applying Cenovus’s advanced operating techniques,” Pourbaix continued, “we expect to increase production at Sunrise while driving down sustaining capital, operating costs and emissions intensity.”
Cenovus’s corporate guidance dated April 26 does not reflect this acquisition. The company plans to update guidance with its second quarter results in July.
Recommended Reading
Chevron Buys 15.4MM Shares of Hess Stock on Open Market
2025-03-17 - Chevron Corp. reported that between January and March 2025 it purchased about 5% of Hess Corp. shares, according to a Securities and Exchange Commission filing.
TG Natural Resources Wins Chevron’s Haynesville Assets for $525MM
2025-04-01 - Marketed by Chevron Corp. for more than a year, the 71,000-contiguous-net-undeveloped-acreage sold to TG Natural Resources is valued by the supermajor at $1.2 billion at current Henry Hub futures.
Abu Dhabi’s Mubadala Buys Stake in Kimmeridge Shale Gas, LNG Ventures
2025-04-10 - Mubadala Energy, owned by Abu Dhabi’s sovereign wealth fund, is buying a stake in Kimmeridge Texas Gas (KTG) and Commonwealth LNG as the United Arab Emirates company makes an entry into U.S. shale.
Oxy, Looking to Cut Debt, Sells D-J Minerals to Elk for $905MM
2025-03-23 - Elk Range Royalties bought 250,000 net royalty acres in the Denver-Julesburg Basin for $905 million from Occidental Petroleum, which is looking to shed debt after last year's acquisition of CrownRock.
Will TG Natural Resources Be the Next Haynesville M&A Buyer?
2025-03-23 - TG Natural Resources, majority owned by Tokyo Gas, is looking to add Haynesville locations as inventory grows scarce, CEO Craig Jarchow said.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.