(Bloomberg) -- Suncor Energy Inc. is set to boost its carbon-intensive oil sand reserves after agreeing to buy TotalEnergies SE’s Canada unit in a C$5.5 billion ($4 billion) all-cash deal.
The acquisition represents a “major step” for Suncor in securing long-term supplies at competitive costs, Chief Executive Officer Rich Kruger said in a Thursday statement. He said the move will provide Canada’s second-largest oil producer with greater freedom on the timing and scope of its oil sands developments.
The transaction, which is pending regulatory approvals and other conditions, has the potential for an additional C$600 million in payments based on oil prices and certain production targets, according to the statement. The deal, which comes three weeks after Kruger joined as CEO following a 39-year career at Exxon Mobil Corp, is expected to be closed by the third quarter.
Kruger was named after a seven-month search that started after a string of worker deaths and pressure from activist investor Elliott Investment Management LP drove out the previous leader.
Read More: TotalEnergies to Boost Returns on Sale of Canadian Oil Sands
With the purchase, Suncor will take possession of a remaining 31.2% working interest in Fort Hills sands mining project and a 50% stake in the Surmont in situ asset. The deal, which will be funded by debt, adds 135,000 barrels per day of bitumen production capacity and 2.1 billion barrels of reserves.
ConocoPhillips Canada, which operates and owns a 50% working interest in Surmont, has a right of first refusal on the stake being sold to Suncor.
©2023 Bloomberg L.P.