Suncor Energy Inc. is deepening its exposure to its Fort Hills oil sands mine, buying an additional 10-per-cent stake even as oil prices languish under $50 (U.S.) a barrel.
Calgary-based Suncor said on Monday it would pay $310-million to France’s Total SA, boosting its ownership stake to 50.8 per cent. The $13.5-billion mine in Northern Alberta is expected to begin pumping crude in late 2017, adding 180,000 barrels per day of new capacity over time.
The deal comes with U.S. and world oil prices trading at less than half the levels of a year ago, fuelling expectations of increased deal-making as companies seek to offload assets to patch up balance sheets.
Suncor said the added spending associated with the transaction would be covered within its current budget of $5.8-billion to $6.4-billion.
Total said the sale further reduces its exposure to Canada’s high-cost oil sands. The company last year scrapped a separate mining venture called Joslyn. It expects to save about $700-million by shrinking its ownership share in Fort Hills to 29.2 per cent.
The deal is expected to close by the end of the year. Teck Resources Ltd. owns 20 per cent of the joint venture.