Suncor Energy (SU), Canada’s premier integrated energy company, confirmed its strategic alliance with Total E&P Canada Ltd., a wholly owned subsidiary of TOTAL S.A. (TOT), following the completion of all regulatory conditions and approvals.
The announcement of the venture was first made in mid-December 2010.
The two companies will work jointly for the development of the Fort Hills mining project and Voyageur upgrader project, both operated by Suncor, as well as the TOTAL-operated Joslyn North mining project.
Per the terms of the agreement, Suncor acquired a 36.75% interest in the Joslyn mining project, leaving TOTAL with 38.25% and the other partners Occidental Petroleum (OXY) and Inpex Canada Ltd. with 15% and 10% interests, respectively.
On the other hand, France-based TOTAL increased its interest in the Fort Hills project to 39.2%, following the purchase of 19.2% interest from Suncor, which currently holds on to 40.8%. The remaining part of the project is retained by Teck Resources Ltd. (TCK).
In the Voyageur upgrader project, Suncor sold 49% stake to TOTAL, with the former scheduled to operate the planned 200,000 barrel per day facility, when completed.
Suncor and TOTAL will work on the Fort Hills mine and Voyageur upgrader simultaneously, with the targeted commencement date of 2016. The Joslyn project expected to begin in 2017–2018, pending necessary permits and approvals.
This collaboration will enable Suncor to expand its oil sands and conventional production platform, bringing it closer to the 1 million barrel oil-equivalent per day volume goal by 2020.
We are maintaining our long-term Neutral recommendation on the stock. Suncor currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
OCCIDENTAL PET (OXY): Free Stock Analysis Report
SUNCOR ENERGY (SU): Free Stock Analysis Report
TECK RESOURCES (TCK): Free Stock Analysis Report
TOTAL FINA SA (TOT): Free Stock Analysis Report
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