By Barry Cox T he Calgary-based energy giant, Suncor Energy reached a deal to buy Murphy Oil Corporation’s five per cent stake of The Syncrude Project which is located 40 kilomaters north of Fort McMurray, Alberta, Canada. he deal, expected to close by the end of June, provided it receives approval from the Competition Bureau, will increase Suncor Energy interest in The Syncrude Project increase to 54 percent from just under 49 percent at an acquisition cost of 937 million.
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“This transaction is a strategic fit for our portfolio given the quality of the resource, our existing interest in Syncrude and the potential for value creation,” CEO Steve Williams said in a press release. The Murphy Oil Corporation’s acquisition was much less eventful than Suncor Energy’s acquisition of Canadian Oil Sands. At that time the all-stock deal was worth $6.9 billion, which included $2.6 billion in the company’s debt and increased Suncor’s share of The Syncrude Project from about 12 percent to 49 percent. Suncor Energy’s, which has vast holdings elsewhere in the oilsands, has made no secret of its intention to scope out bargain deals during the prolonged downturn in oil prices. Suncor Energy has argued that with a larger ownership stake, it could allocate more capital resources to improve operations at The Syncrude Project, which has experienced a series of repetitive outages in recent years delaying production. The deal increases Suncor’s oilsands production capacity by 17,500 barrels a day, adding to their increased year over year production by 89,000 barrels a day for the quarter, while reducing cash operating costs per barrel by $4.15 for the same time period. “This growth gives us even more leverage to oil prices as they recover,” said Williams.
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This is great news for Suncor Energy as oil prices start to recover.
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SPOTLIGHT ON BUSINESS • MAY 2016
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