Suncor (SU) to Purchase Additional Stake in Fort Hills Project
Suncor Energy SU recently announced that it agreed to acquire an additional 21.3% working interest in the Fort Hills oil sands project, along with associated sales and logistics agreements from Teck Resources TECK, in a cash deal worth C$1 billion.
The acquisition deal, subject to regulatory approval, is anticipated to be concluded in the first quarter of 2023. The deal will be financed by cash from asset sale processes currently underway.
Calgary-based Suncor, the operator of Fort Hills, will see its cumulative ownership in the project increase to 75.4%. The remaining 24.6% will be held by the French energy major TotalEnergies SE.
Per SU, this transaction sets a current market value for Fort Hills, and the firm will recognize a non-cash impairment charge on its existing 54.1% interest of C$2.6 billion in its third-quarter 2022 results.
Kris Smith, interim president and chief executive officer for Suncor, stated that the purchase of the additional stake in Fort Hills meets SU’s return objectives, builds upon the firm’s strategy to optimize its portfolio around core operated assets and emphasizes Suncor’s confidence in the long-term value of the project. “This acquisition is a part of our Base Plant mine replacement strategy,” he added.
Vancouver, Canada-based Teck Resources Limited is a diversified resource company committed to mining and mineral development with business units focused on steelmaking coal, copper, zinc and energy. The company's principal products include steelmaking coal, copper concentrates and refined copper cathodes, refined zinc and zinc concentrates, energy products, such as bitumen, and lead concentrates.
Founded in 1917, Alberta-based Suncor Energy, Inc. is Canada's premier integrated energy company. The company's operations include oil sands development and upgrading, conventional and offshore crude oil and gas production, petroleum refining and product marketing.
SU is one of the largest owners of oil sands worldwide. The company gained new oil sands properties to supplement its existing operations in northern Alberta, making it the dominant producer in the region where reserves are second only to Saudi Arabia.
Suncor currently carries a Zacks Rank #3 (Hold). Investors interested in the energy space might look at some top-ranked stocks — NexTier Oilfield Solutions NEX and Murphy USA MUSA — each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NexTier’s 2022 earnings stands at $1.40 per share, indicating an increase of about 425.6% from the year-ago loss of 43 cents.
NEX beat estimates for earnings in all the trailing four quarters, the average being around 271%.
The Zacks Consensus Estimate for Murphy USA’s 2022 EPS has been revised upward by about 19.7% over the past 60 days from $21.39 to $25.61.
MUSA beat the consensus mark for earnings in all the trailing four quarters, the average being approximately 51%.
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