BP is selling off its oilsands project in Canada under a deal with Cenovus Energy, which will see it paid in cash and a stake in the offshore Bay du Nord project.
BP has a 50% non-operated stake in the Sunrise oilsands project. It will transfer this to Calgary-based Cenovus for C$600 million ($467mn), plus a contingent payment of up to C$600mn, which expires in two years.
Cenovus will also transfer its 35% stake in the undeveloped Bay du Nord, off Newfoundland and Labrador.
The transfer will have an effective date of May 1, 2022. The deal is due to close in the third quarter of this year.
Cenovus has operated Sunrise since 2021 with a 50% stake. The deal, therefore, gives it 100% of the oilsands project.
“Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimisation opportunities available,” said Alex Pourbaix, Cenovus President and CEO.
“By applying Cenovus’s advanced operating techniques, we expect to increase production at Sunrise while driving down sustaining capital, operating costs and emissions intensity.”
The steam-assisted gravity drainage (SAGD) Sunrise project is producing around 50,000 barrels per day. Cenovus intends to reach the nameplate 60,000 bpd capacity through a multi-year development programme.
“This is an important step in our plans to create a more focused, resilient and competitive business in Canada. Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador,” said BP senior vice president for Gulf of Mexico and Canada Starlee Sykes.
“Along with BP’s active Canadian marketing and trading business, this will position BP Canada for strong future growth.”
Following the completion of the deal, BP will no longer be invested in oil sands. Instead, it will be focused on the offshore. The company has six exploration licences off Eastern Newfoundland for now.
The Bay du Nord project would involve an FPSO, with capacity of 200,000 bpd. Equinor, the project operator, has said breakeven for the offshore project would be less than $35 per barrel.
BP had a stake in the Cappahayden and Cambriol Central discoveries, adjacent to Bay du Nord.