Canada’s premier integrated energy company Suncor Energy (SU) entered into an agreement with TAQA NORTH – a subsidiary of the Abu Dhabi National Energy Company PJSC – to sell some of its natural gas properties. The deal has been finalized for approximately C$285 million ($274 million) effective April 1, 2010.
 
The properties to be divested are located in the Bearberry and Ricinus areas in west central Alberta, near Sundre, which produce approximately 6,100 barrels of oil equivalent per day.
 
The transaction is subject to closing conditions and regulatory approvals and is expected to be completed in the latter part of the third quarter.
 
Since the acquisition of Petro-Canada in 2009, Suncor started selling off an array of non-core assets in an effort to reduce debts. The company has set an asset sale target of $2 billion to $4 billion for 2010. With the sale of the Bearberry and Ricinus properties, the company’s asset divesture program reached approximately $2.4 billion.
 
Suncor has already divested all of its oil and gas producing assets in the United States Rockies, non-core natural gas properties in Western Canada and all Trinidad and Tobago assets. Other properties that are likely to be divested in the future include some Western Canada and North Sea assets.
 
Suncor’s continuous efforts to sell non-core assets highlight the company’s need for cash, particularly to support its significant anticipated capital expenditure requirements (C$5.5 billion for 2010). This accounts for our long-term Underperform rating on the stock, along with Suncor’s high debt level, weak production outlook, and risks related to the Petro-Canada acquisition.
Read the full analyst report on “SU”
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