Equinor buying Suncor’s UK assets for $850 million

Equinor UK Limited, a subsidiary of Norway’s state-owned energy giant Equinor, has inked an agreement to acquire Suncor Energy UK Limited, a subsidiary of Canada’s Suncor, for a total consideration of $850 million.

The acquisition entails Suncor’s non-operated offshore interests in the North Sea, including a non-operated interest in the producing Buzzard oil field (29.89 per cent), an additional operated interest in the Rosebank development (40 per cent) and Suncor’s employees based in the UK who work with these assets.

Philippe Mathieu, Equinor’s executive vice president for Exploration and Production International, remarked: “This transaction is in line with Equinor’s strategy of optimising our oil & gas portfolio and deepening in our core countries. We are building on our long-standing position as a broad energy partner to the UK, strengthening our position as a reliable energy provider in Europe, while continuing to deliver on our ambition of becoming a net-zero company.”

The Norwegian giant supplied the equivalent of 29 per cent of the UK’s total natural gas demand in 2022 and is looking to further support the UK economy by investing billions in energy infrastructure, including offshore wind, carbon capture and storage (CCS), hydrogen, power, and oil and gas.

According to Equinor, the Suncor acquisition will add approximately 15,000 barrels of oil equivalent per day in equity share in 2023 and create synergies with its existing operations while increasing the firm’s operated share of the Rosebank development with an additional 40 per cent. The transaction is subject to relevant regulatory approvals.

As a reminder, Suncor revealed last year that its focus in 2023 would be on production of 65 – 75 kbpd, Terra Nova restart, West White Rose construction and the sale of UK assets in “a favourable market.” Therefore, the firm was contemplating the sale of its interests in CNOOC’s producing Buzzard field and the Equinor-operated Rosebank field, which is under development.

The Buzzard field, which is currently producing at approximately 60,000 barrels of oil equivalents per day, consists of four fixed platforms and three subsea manifolds. While the liquids are exported via the Forties Pipeline System to Hound Point Terminal where the crude is lifted and sold in the open market, the gas volumes are exported via the FUKA system. There is an electrification initiative to reduce the CO₂ emissions on Buzzard.

Rosebank is being developed in line with the UK’s North Sea Transition Deal and the Rosebank partners are targeting a final investment decision in 2023, subject to the UK government’s and partners’ approval. The Rosebank field, located about 130 km west of the Shetland Islands on the UK continental shelf, has expected recoverable resources of approximately 300 million barrels of oil.

The Rosebank development has been optimised to reduce carbon emissions and the FPSO Petrojarl Knarr will be prepared for future electrification in line with the North Sea Transition Deal. The production from the field will be through subsea wells tied back to a redeployed FPSO for processing and offloading at the Rosebank field.

This is one of the previously delayed energy projects, which is currently facing additional obstacles that may hinder its progress and delay the sanctioning yet again. Currently, the final investment decision (FID) is planned for Q3 2023.

In a separate statement, Suncor Energy confirmed a share purchase agreement with Equinor UK Limited for the sale of Suncor Energy UK Limited, explaining that the deal is valued at approximately C$1.2 billion, excluding working capital adjustments and including contingent consideration of C$338 million that is conditional upon the submission of the Rosebank development application to the regulator. The transaction is expected to close in mid-2023.

Kris Smith, Interim President and Chief Executive Officer of Suncor, commented: “The decision to sell our UK Exploration & Production business is a clear example of our commitment to optimise our asset portfolio. Having the right ‘fit and focus’ in our portfolio enables us to both ensure effective capital allocation consistent with our strategic objectives and to focus our organisation on delivering value in the rest of our portfolio, including our E&P business in East Coast Canada.”