Suncor Energy is reconsidering its $6.1 billion buyout of French super major TotalEnergie’s Canadian assets after an American partner threw a wrench in its plans..Last week ConocoPhillips announced it's exercising its right of first refusal to acquire Total’s 50% interest in the Surmont thermal oil sands project in northern Alberta for $ 4 billion as well as contingent payments worth about $440 million..“Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio,” ConocoPhillips Chief Executive Ryan Lance said in a statement..“Upon close, we look forward to leveraging our position as 100% owner and operator of Surmont to further optimize the asset while progressing toward our overall interim and long-term emissions intensity objectives.”.In response, Suncor said the agreement to close the transaction was conditional on ConocoPhillips waiving its right of first refusal in respect of the Surmont working interest..“As a result … Suncor will be assessing the transaction in light of this change.”.It’s easy to see why Suncor wanted the assets in the first place..Based on an average oil price of $60 US, the transaction will add approximately $600 million of annual free cash flow to Conoco in 2024, inclusive of approximately $100 million of annual maintenance and pad development costs while producing about 180,000 barrels per day..Since 2016, Surmont's GHG emissions intensity declined by about 20%, and ConocoPhillips has plans for future emissions reduction by applying both current and new technology. ConocoPhillips is also a member of the Pathways Alliance, working to advance carbon capture and storage in Alberta..For its part, Suncor was looking to secure reliable bitumen volumes to keep its upgrader full after its base mine reaches the end of its operational life in the next decade. Plans to expand were effectively put on hold by Ottawa’s climate change policies..The deal also included Total’s interest in the Fort Hills mine.
