MRO Magazine

Suncor to acquire Teck Resources’ stake in Fort Hills oilsands project for $1B

November 1, 2022 | By Amanda Stephenson

CALGARY (CP) – Suncor Energy Inc. will buy out Teck Resources Ltd.’s 21.3 per cent stake in the Fort Hills oilsands project for approximately $1 billion, the two companies announced late Wednesday.

The 194,000 barrel-per-day capacity oilsands mine north of Fort McMurray, Alta., is currently co-owned by Suncor, Teck, and French company Total Energies EP Canada Ltd.

Upon closure of the deal, Calgary-based Suncor, which is the operator of Fort Hills, will see its stake in the oilsands project increase to 75.4 per cent. TotalEnergies will own the remaining 24.6 per cent.

“The acquisition of an additional interest in Fort Hills meets our return objectives, builds upon our strategy to optimize our portfolio around our core operated assets and underscores Suncor’s confidence in the long-term value of the Fort Hills project,” said Suncor interim president and CEO Kris Smith in a news release.


The Fort Hills oilsands mine began operation in 2018 but has been dogged by difficulties.

The mine was unable to ramp up quickly to full capacity, in part because of the Alberta government’s 2019 move to curtail oil production in the province to help address the widening price discount for Canadian oil caused by a shortage of pipeline export capacity.

Then in 2020, one of Fort Hills’ two production trains was shut down due to low oil prices because of the COVID-19 pandemic.

The deal announced Wednesday is based on a current market value for Fort Hills, Suncor said, and as a result, Suncor will recognize a non-cash accounting impairment charge on its existing 54.1 per cent interest of approximately $2.6 billion in its third-quarter results, which will be announced Nov. 2. The company will also hold an investor presentation on Nov. 29.

Vancouver-based Teck said it expects to record a non-cash impairment charge of $950 million in the third quarter of 2023. Teck is slated to hold its third-quarter earnings call Thursday morning.

Teck has been saying for some time that it was interested in selling its stake in Fort Hills. The company is currently constructing a $5 billion copper mine in Chile. It has said it wants to concentrate on metals and minerals that are essential foralow-carbonworld, including copper, zinc and steelmaking coal.

“This transaction advances our strategy of pursuing industry-leading copper growth and rebalancing our portfolio of high-quality assets to low-carbon metals,” said Teck CEO Jonathan Price in a release Wednesday, adding the company will review the use of the proceeds from the sale early in 2023.

On Wednesday, Suncor said it has conducted an in-depth review of the Fort Hills project and has begun a multi-year “improvement initiative” aimed at boosting the mine’s production and lowering operating costs.

“While the Fort Hills mine has faced challenges in the early years of the mine life, including challenges due to government-directed production shut-ins, I have full confidence in our current mine plan assembled with fresh external mining perspectives,” Smith said.

Suncor said it will finance the transaction with cash from asset sale processes currently underway.

The transaction is subject to regulatory approval and is expected to close in the first quarter of 2023.


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