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Total E&P buys 20% of Fort Hills from UTS
Petroleum News
Total E&P Canada Ltd., a Total subsidiary, said July 7 that it has signed an agreement with UTS Energy Corp. to acquire UTS Corp. with its main asset, a 20 percent interest in the Fort Hills mining project in Alberta’s Athabasca region.
UTS will transfer assets other than the Fort Hills interest to a new company and Total will pay C$3.08 dollars per share to acquire UTS.
With the cash held by UTS and acquired by Total, C$355 million or C73 cents per share, the cost of the acquisition to Total is approximately C$1.15 billion, C$2.35 per share, the company said.
Fort Hills is operated by Suncor Energy Inc. with a 60 percent interest. The remaining 20 percent is held by Teck Resources Ltd. Total said the most recent estimates put Fort Hills’ resources at some 3.4 billion barrels of bitumen, which will be recovered through open-pit mining.
The first phase of the project, some 160,000 barrels per day, has administrative approvals to launch development in the near future, Total said, with a target production startup of 2015-16.
Earn-in costs owed to UTS by its Fort Hills partners, approximately C$704 million, will be transferred to Total, making the net acquisition cost to Total for approximately 680 million barrels of resources C65 cents per barrel.
Some divestiture at Joslyn Yves-Louis Darricarrere, president of Total Exploration and Production, said the acquisition of UTS “will allow us to strengthen and reorganize our asset portfolio in the Canadian oil sands. With Suncor Energy Inc., we will benefit from the experience of a leading partner, whose expertise in the mining operation of oil sands is well recognized.”
Total said it is considering a parallel divestiture of some of its interest in the Joslyn. Total operates Joslyn with a 75 percent interest and said its objective is to reduce its interest to approximately 50 percent, while retaining its role as operator.
Production potential at Joslyn, a mining project, is estimated at 200,000 bpd, Total said.
Total also owns a 50 percent interest in the Surmount steam-assisted gravity drainage project, where phase 1 production began in 2007 and is currently averaging 20,000 bpd, with plateau production estimated at 27,000 bpd.
Phase 2 at Surmount began recently, Total said, with production startup scheduled for 2015. Combined phase 1 and phase 2 production is estimated at 110,000 bpd.
Total also has a 50 percent interest in the Northern Lights project following its 2008 acquisition of Synenco Energy.
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