Calgary-headquartered Suncor Energy has revealed changes in Newfoundland and Labrador’s offshore oil sector by announcing the divestment of interests in three oilfields. In a statement released on Sunday, the company based in Calgary disclosed a deal with U.K.-based Ithaca Energy to sell its 48% stake in Terra Nova, 40% stake in White Rose, and 38.6% stake in West White Rose offshore assets. The transaction involves an upfront cash payment of $1.2 billion along with a potential additional payment of up to $350 million dependent on future oil prices.
“This agreement enhances our focus on ventures that deliver enduring value to our shareholders in the long run,” remarked Suncor CEO Rich Kruger in the announcement. Kruger emphasized the company’s strategic alignment with its competitive strengths and extensive, integrated business supported by substantial, long-lasting oil sands reserves.
According to the statement, Ithaca will undertake investment obligations and all forthcoming liabilities linked to the assets, including a $500 million regulatory well compliance program commencing in 2027 for Terra Nova and total estimated abandonment and lease liabilities of $1.4 billion. The effective date of the transaction is July 1, with the closing anticipated early in the upcoming year subject to closing conditions, regulatory approvals, and partner consents. Suncor intends to retain its stake in N.L.’s Hebron and Hibernia oilfields.
In a separate communication, Ithaca expressed that the acquisition aligns with its expansion strategy. “This acquisition signifies a new phase of growth for Ithaca Energy as we initiate our first international acquisition in Offshore East Coast Canada,” stated Ithaca’s executive chairman Yaniv Friedman.
Newfoundland and Labrador’s Energy and Mines Minister Lloyd Parrott hailed the development as promising, noting Suncor’s return to focus on its core operations in the oil sands out west had been anticipated. Parrott expressed optimism about Ithaca’s entry, highlighting the company’s experience in the North Sea and its understanding of the province’s challenging environmental conditions.
Parrott affirmed his belief that Ithaca aims to prolong the lifespan of the oilfields and collaborate with other industry players, emphasizing that job security for N.L. workers is a priority. OilCo CEO Jim Keating echoed the positive sentiment, viewing the announcement as a vote of confidence in the province’s offshore sector and foreseeing growth prospects with Ithaca’s expertise in late-life field development.
Keating emphasized the potential for new ideas and risk appetite introduced by new entrants in the basin like Ithaca, underscoring the company’s interest in Equinor’s Bay du Nord project. The evolution in the oil and gas sector globally, with reinvestment in legacy projects like offshore operations, was also highlighted.
Liberal energy critic Fred Hutton acknowledged the common occurrence of companies divesting stakes but expressed surprise at the announcement. He emphasized the importance of job implications and pledged to address the matter with Suncor and in the House of Assembly upon its reopening. Hutton highlighted the significant role of the oil industry in the province and viewed Ithaca’s substantial involvement as a positive indicator of interest from a new player.
