Calgary-headquartered Suncor Energy has unveiled changes in Newfoundland and Labrador’s offshore oil sector by announcing the divestment of interests in three oilfields. In a press release on Sunday, the energy company based in Calgary disclosed a deal with U.K.-based Ithaca Energy to sell its stakes in Terra Nova (48%), White Rose (40%), and West White Rose (38.6%) offshore assets. The transaction involves an upfront cash payment of $1.2 billion and a potential additional payment of up to $350 million contingent on future oil prices.
Suncor’s CEO Rich Kruger stated, “This deal further concentrates our efforts on initiatives that deliver the highest long-term shareholder value. We are aligning our portfolio with our competitive strengths and the advantages of our extensive, physically-integrated business, supported by large-scale, enduring oil sands resources.”
According to the announcement, Ithaca will take over investment commitments and future liabilities linked to the assets, such as a $500-million regulatory well compliance program starting in 2027 at Terra Nova, and the total estimated abandonment and lease liabilities amounting to $1.4 billion.
The effective date of the transaction is July 1, with an anticipated early closure in the upcoming year, subject to closing conditions, regulatory approvals, and partner consents. Suncor will retain its stake in N.L.’s Hebron and Hibernia oilfields.
In a separate statement, Ithaca expressed that the acquisition aligns with its growth strategy, with Ithaca’s executive chairman Yaniv Friedman emphasizing, “This acquisition signifies the next phase of growth for Ithaca Energy as we make our first international acquisition in Offshore East Coast Canada.”
N.L.’s Energy and Mines Minister Lloyd Parrott welcomed the development, noting Suncor’s intention to refocus on oil sands in the west. Parrott praised Ithaca’s experience in the North Sea, highlighting its understanding of Newfoundland’s challenging environment. He expressed optimism about the province’s future, emphasizing the global significance of Ithaca’s entry and its potential for collaboration and field extension.
Parrott assured that Ithaca aims to prolong the lifespan of the oilfields and collaborate with existing companies rather than acquiring them outright, emphasizing the preservation and expansion of local jobs. OilCo CEO Jim Keating also viewed the transaction positively, citing it as a vote of confidence in Newfoundland and Labrador’s offshore industry.
The involvement of Ithaca, known for its expertise in late-life field development, is seen as a strategic move that could bring fresh perspectives and opportunities to the province’s oil sector. Keating highlighted the potential interest of Ithaca in Equinor’s Bay du Nord project and the broader trend of reinvestment in legacy oil projects worldwide.
Fred Hutton, Liberal energy critic, acknowledged the common practice of companies divesting stakes and expressed interest in monitoring the impact on employment. He emphasized the significance of the oil industry in the province and the potential for Ithaca to become a major player, indicating a positive outlook for the region.
Overall, the deal signifies a significant shift in the Newfoundland and Labrador offshore oil industry, with stakeholders optimistic about the potential benefits and growth opportunities it may bring.