Suncor Energy, headquartered in Calgary, has revealed significant changes in the offshore oil sector of Newfoundland and Labrador, announcing the sale of its interests in three oilfields.
In a statement released on Sunday, the energy firm disclosed that it has come to an agreement with Ithaca Energy, a company based in the U.K., to divest its 48 percent stake in Terra Nova, a 40 percent interest in White Rose, and a 38.6 percent share in the West White Rose offshore assets.
The transaction is valued at $1.2 billion in immediate cash, along with a potential payment of up to $350 million tied to future oil prices, according to the company.
“This deal allows us to concentrate our efforts on ventures that provide the highest long-term value to our shareholders,” stated Suncor’s CEO, Rich Kruger.
“We are refining our portfolio to leverage our competitive strengths and the distinctive qualities of our integrated business, which is supported by extensive, long-lasting oil sands resources.”
The company noted that Ithaca “will take over investment obligations and all future liabilities linked to the assets, including a $500 million regulatory compliance initiative commencing in 2027 at Terra Nova, along with an estimated total of $1.4 billion in abandonment and lease liabilities.”
The statement indicated that the deal will take effect from July 1 and is anticipated to finalize early in the coming year, pending closing conditions, regulatory approvals, and partner consents.
Suncor confirmed it will retain its stakes in the oilfields of Hebron and Hibernia located in Newfoundland and Labrador.
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Ithaca, in its own announcement, stated that the acquisition aligns with its growth objectives.
“This acquisition signifies a new phase of growth for Ithaca Energy, as we embark on our first international acquisition in Offshore East Coast Canada,” remarked Yaniv Friedman, executive chairman of Ithaca.
An international business deal related to Newfoundland and Labrador’s offshore is being met with optimism in the province’s oil and gas sector. A big player in the North Sea is expanding, while Suncor is pulling back. The CBC’s Terry Roberts reports.
“This transaction fulfills our clearly defined growth strategy as we aim to diversify and enhance our production and resource base while replicating our successes in the United Kingdom Continental Shelf … through careful international expansion in areas where we believe we can generate long-term value for our shareholders.”
‘Sends a signal globally’
Lloyd Parrott, the Minister of Energy and Mines for Newfoundland and Labrador, described the development as exciting, noting that it has been widely known “for a while that Suncor was planning to return to their core operations out west in the oilsands.”
He stated that Ithaca, with its background in the North Sea, is familiar with the provincial environment, particularly the challenging climate and rugged landscape.
“I’m thrilled to welcome a player like this to Newfoundland,” Parrott told CBC News, emphasizing the positive outlook for the province.
“It sends a global message, without a doubt. A new player, a global player, is entering the field, and they are a significant operator in the North Sea. They engage in similar work to what we are doing currently, as well as different types of work in smaller fields. They leverage subsea tiebacks to maximize their output.”
Energy Minister Lloyd Parrott assures that the company will safeguard jobs in Newfoundland. (CBC)
Parrott expressed confidence that Ithaca aims to prolong the life of the oilfields and collaborate with other firms, as it is not acquiring them outright.
He mentioned that he has already received assurances that the company will protect jobs in Newfoundland, highlighting that the local workforce’s expertise was a factor in attracting Ithaca to the region.
“There will be no job losses resulting from this. If anything, it will lead to job growth,” Parrott asserted.
Jim Keating, CEO of OilCo, views the development as a favorable indication for the future of Newfoundland and Labrador’s oilfields. (CBC)
Jim Keating, CEO of OilCo, which oversees oil and gas activities for the Newfoundland and Labrador government, also regards the announcement as beneficial for the province.
“Today is a significant day—a strong endorsement for our offshore industry,” he stated during a virtual conversation with CBC News from Halifax.
Ithaca is recognized as one of the largest operators in the North Sea and specializes in the development of mature fields, Keating mentioned, noting that this applies to the Terra Nova and White Rose oilfields. This marks the company’s first investment outside the U.K., and he anticipates a growth-oriented strategy from them.
Currently, Keating has no concerns regarding the announcement, considering it a natural evolution in the oil fields. He added that when a new company enters a basin, they can introduce innovative ideas and “a new willingness to take risks.”
Keating suggested that a company like Ithaca might express interest in Equinor’s proposed Bay du Nord project, for which a final decision is expected in early 2027.
He added that globally, oil and gas companies are reinvesting, with many “legacy projects, like the offshore, regaining favor.”
‘It’s a huge industry’
Fred Hutton, the Liberal energy critic, stated that it is not uncommon for companies to divest their interests, though he admitted to being somewhat “surprised.”
Speaking on CBC Radio’s The St. John’s Morning Show, he noted that his party is particularly concerned about the potential job implications, and they intend to address this issue with Suncor and in the House of Assembly when it resumes in the fall.
Hutton mentioned he was unaware of the deal prior to Sunday’s announcement, but acknowledged, “there’s always talk of movement within this industry. It’s a massive industry.”
Considering the percentages involved in the agreement, Hutton remarked that Ithaca is poised to become a significant player in the province’s oil sector, which could indicate a positive sign of a new company’s interest in the area.
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