Cenovus Energy Inc said it would buy British oil major BP Plc’s 50% stake in the Sunrise oil sands project in northern Alberta, as the Canadian energy company strengthens its position in the oil sands industry.
The Sunrise project has been operated by Cenovus, which holds the remaining 50% stake, since the beginning of 2021 after its acquisition of Husky Energy.
The total value of the deal includes C$600 million ($466 million) in cash and a variable payment of C$600 million expiring after two years, the Canadian energy company said.
The deal will mark BP’s shift away from Canadian oil sands production, which requires complex and energy-intensive extraction processes that cause heavy carbon pollution, and towards offshore production.
As part of Monday’s deal, the British energy giant will buy Cenvous’s 35% stake in the undeveloped Bay du Nord project offshore Newfoundland and Labrador.
BP has laid out plans to reach net-zero emissions by 2050 or sooner.
The Sunrise oil sands project produces 50,000 barrels per day (bpd) and Cenovus expects to achieve a capacity of 60,000 bpd.
“We expect to increase production at Sunrise while driving down sustaining capital, operating costs and emissions intensity,” Cenovus’s Chief Executive Officer Alex Pourbaix said in a statement.
Calgary-based Cenovus said it would provide an updated forecast during its second-quarter results next month to reflect the deal, expected to close in the third quarter.
The deal is expected to be immediately added to adjusted funds flow and cash from operating activities, the company said.
