French TotalEnergies plans to sell its Canadian tar sands assets

Sep 28 (Reuters) – TotalEnergies (TTEF.PA) said on Wednesday it was considering divesting its Canadian oilsands business and listing the new company on the Toronto Stock Exchange as assets do not match the low level of the French oil major. emissions strategy.

During an investor presentation in New York, TotalEnergies said the proposal would be put to a shareholder vote at its next annual general meeting in May 2023. read more

The spin-off would include TotalEnergies’ 24.58% stake in the Fort Hills oil sands mining project in northern Alberta and its 50% stake in the Surmont thermal project, as well as midstream and related to trading.

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Canada’s oil sands hold some of the largest crude oil reserves in the world, but are more carbon-intensive and more expensive to produce than many conventional oil projects around the world.

“We are not the best shareholder of these assets because as we have a climate strategy, we do not want to invest in these assets”, declared the managing director Patrick Pouyanne.

The French major’s oil sands assets will generate $1.5 billion in cash in 2022, he added.

Pouyanné told investors that TotalEnergies decided on a spin-off because the process would not depend on finding a buyer. The company will temporarily retain a minority stake in the spin-off to facilitate the transition.

The new company would produce just over 100,000 barrels of oil per day, according to Reuters calculations, making it similar in size to Calgary-based MEG Energy (MEG.TO).

TotalEnergies may be able to extract more value with a spin-off rather than a sale process, said Matt Murphy, an analyst at investment firm Raymond James, but the new company may also struggle to come on stream. stand out in the crowded oil and gas sector.

“At the right price, an opportunity like this could grab the attention of investors, but there is no shortage of yield opportunities in this space,” Murphy said.

TotalEnergies has been pulling out of the region for several years and in 2020 took a $9.3 billion writedown on the value of its oil sands assets.

The Fort Hills mining project, majority-owned and operated by Suncor Energy , has been plagued by operational issues since commissioning in 2018, leading to higher costs and a slow ramp-up of the production.

A Suncor spokesperson said it would be premature to comment on what TotalEnergies might be considering.

ConocoPhillips (COP.N), the co-owner of Surmont, did not immediately respond to a request for comment.

($1 = 1.3614 Canadian dollars)

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Reporting by Nia Williams Editing by Marguerita Choy and David Gregorio

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