Murphy Oil Corp. of El Dorado announced Wednesday evening that its Canadian subsidiary has agreed to sell oil sands assets in Alberta to Suncor Energy for about $744 million.
The purchase and sale agreement was for Murphy’s 5 percent stake in Syncrude Canada Ltd., which operates two oil sands mines in northeastern Alberta and is one of the largest oil sands producers.
Suncor Energy, an integrated energy company based in Calgary, is Canada’s largest crude oil producer and was already the largest owner in the Syncrude consortium.
The non-core asset sale was for about $937 million in Canadian dollars, subject to closing adjustments, according to a news release from Murphy, the publicly traded global oil and gas exploration giant.
The deal, subject to regulatory approval, is expected to close in mid-year 2016. The five percent stake represented an average of 15,600 barrels of oil equivalent per day in the first quarter of 2016, the release said.
“We are pleased to announce this transaction with a strategic buyer as we continue with repositioning our portfolio,” Murphy President and CEO Roger W. Jenkins said in the release. “Syncrude has been an integral piece of our production and reserve base for over 22 years. During that time we have increased our overall resource base significantly and we continue to narrow our scope as an independent oil and natural gas company.”
In January, Murphy Oil reported a net loss for 2015 of $2.27 billion, or $13.03 per share. In March, the company said it had frozen 2016 salaries for named executive officers at 2015 levels. Murphy stock closed Wednesday at $36.24, up $1.37.
“In recent years we have balanced our offshore business by strategically entering into the onshore unconventional space in North America,” Jenkins continued in the news release. “The sale of Syncrude will further place our focus in North America on our unconventional assets while simultaneously strengthening the financial flexibility of our balance sheet.”
Suncor said in a press statement that the purchase would increase its share in Syncrude from 48.74 to 53.74 percent, and it expects to increase production by 40 percent over 2015.
“This growth gives us even more leverage to oil prices as they recover, Suncor President and CEO Steve Williams said in a statement, noting that the purchase builds on his company’s recent acquisition of Canadian Oil Sands. “This transaction is a strategic fit for our portfolio.”
Murphy’s assets in Canada include non-operating interests in the Hibernia and Terra Nova fields off the shore of Newfoundland and shale gas properties in the Montney Formation of British Columbia, according to Murphy’s website.
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