Under the terms of the agreement, UTS will transfer its assets, other than its Fort Hills interest, to a newly formed company and Total E&P Canada will pay a cash amount of CAD3.08 per share to acquire UTS. Taking into account the cash held by UTS and acquired by Total (CAD355m, equivalent to CAD0.73 per share), the cost of the acquisition for Total amounts to about CAD1.15bn.
Under a plan of arrangement, UTS will recommend that its shareholders approve Total’s acquisition of the company. The transaction is subject to regulatory approvals from the Canadian authorities.
The Fort Hills project is operated by Canada’s Suncor Energy with a 60% interest and the remaining 20% held by Teck Resources. The most recent estimates put Fort Hills’ resources at around 3.4 billion barrels of bitumen, which will be recovered through open-pit mining.
The project will be developed in two phases. The first phase of approximately 160,000 barrels per day has already obtained the necessary administrative approvals to launch the development in the near future with a target production start-up, as expected by Total, in 2015-2016.
The earn-in costs owed to UTS by its Fort Hills partners (approximately CAD704m) will be transferred to Total, which means that the net acquisition cost to Total for approximately 680 million barrels of resources is CAD0.65 per barrel.
Parallel to this transaction, Total is considering divesting some of its interest in the Joslyn mine, while retaining its role as operator, with the objective of an approximately 50% stake.
Yves-Louis Darricarrere, president of Total Exploration and Production, said: “Total is very pleased with this acquisition of a high-quality asset that will allow us to strengthen and reorganize our asset portfolio in the Canadian oil sands. With Suncor Energy, we will benefit from the experience of a leading partner, whose expertise in the mining operation of oil sands is well recognized.”
