Calgary-headquartered Suncor Energy has revealed a significant change in the offshore oil sector of Newfoundland and Labrador by announcing the divestment of its interests in three oilfields. The company disclosed on Sunday that it had struck a deal with Ithaca Energy, based in the U.K., to sell its ownership stakes in Terra Nova, White Rose, and West White Rose offshore assets.
The agreement involves an initial cash payment of $1.2 billion along with a potential additional payment of up to $350 million linked to future oil prices, as stated by Suncor. Suncor’s CEO Rich Kruger emphasized that the transaction aligns with their strategy to enhance long-term shareholder value by focusing on core opportunities and leveraging their robust, integrated business supported by extensive oil sands resources.
Under the terms of the deal, Ithaca will take over the investment commitments and liabilities associated with the assets, including a regulatory well compliance program and total estimated abandonment costs. The effective date of the transaction is July 1, with the closing expected in the early part of the upcoming year, subject to regulatory approvals and partner consents.
While Suncor retains its stakes in the Hebron and Hibernia oilfields in Newfoundland and Labrador, Ithaca expressed that the acquisition is in line with its growth agenda. Ithaca’s executive chairman, Yaniv Friedman, highlighted that the purchase signifies a new growth phase for the company, marking its entry into the Offshore East Coast Canada market.
Energy and Mines Minister of Newfoundland and Labrador, Lloyd Parrott, welcomed the development, noting Suncor’s strategic shift back to the oilsands in Western Canada. He expressed optimism about Ithaca’s entry into the province, citing the company’s expertise in challenging environments like the North Sea. Parrott emphasized that the arrival of a prominent global player like Ithaca signals a promising future for Newfoundland and Labrador’s oil sector.
Assured by Ithaca’s intentions to extend the life of the oilfields and collaborate with other industry players, Parrott emphasized the importance of preserving jobs in the region. He confirmed that Ithaca’s interest in Newfoundland and Labrador is driven by the skilled workforce and the company’s growth objectives.
Meanwhile, OilCo CEO Jim Keating viewed the acquisition positively, emphasizing the vote of confidence it represents for the province’s offshore industry. Keating highlighted Ithaca’s expertise in late-life field development, aligning with the characteristics of the Terra Nova and White Rose assets. He anticipated a growth strategy from Ithaca in its first international venture beyond the U.K., anticipating innovative approaches and a fresh perspective in the region.
The development drew attention from Liberal energy critic Fred Hutton, who acknowledged the common industry practice of divesting stakes but expressed curiosity about the deal’s impact on employment. Hutton pledged to address potential job implications with Suncor and in the provincial legislature upon its reopening, underscoring the significance of the oil industry to Newfoundland and Labrador’s economy.