BP has agreed to divest its 50% stake in the Sunrise oil sands project in Canada to Cenovus Energy in exchange for payments up to C$1.2bn ($929.1m) and the latter’s 35% stake in the offshore Bay du Nord project in the country.

The consideration is made up of C$600m ($464.5m) in cash and a contingent payment of up to C$600m ($464.5m) with expiry after two years.

The Sunrise oil sands project is located in northern Alberta. Cenovus Energy is the operator of the project with a 50% stake.

Currently, the oil sands project produces nearly 50,000 barrels per day (bbls/d). It is expected to reach nameplate capacity of 60,000bbls/d through a multi-year development campaign planned by Cenovus Energy.

BP said that it will no longer hold stakes in Canadian oil sands production and will move its focus to future potential offshore growth.

Presently, the company has stakes in six exploration licenses in the offshore Eastern Newfoundland Region.

The Bay du Nord project is an undeveloped asset located offshore Newfoundland and Labrador. BP said that the non-operated stake in the project will enlarge its position offshore Eastern Canada.

Located in the Flemish Pass basin, the Bay du Nord project, which is operated by Equinor, consists of multiple oil discoveries.

BP Gulf of Mexico and Canada senior vice president Starlee Sykes said: “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.

“Along with bp’s active Canadian marketing and trading business, this will position bp Canada for strong future growth.”

For Cenovus Energy, by taking full ownership of the Sunrise oil sands project, the company will be further improving its core strength in the oil sands.

The project has been operated by Cenovus Energy since early 2021 after its nearly $3bn merger with Husky Energy.

Cenovus Energy president and CEO Alex Pourbaix said: “Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimisation opportunities available.

“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 deal, which is subject to regulatory approvals, is anticipated to close in Q3 2022.