TotalEnergies said that it will sell its stake of 50% in the producing Surmont oil sands asset in Canada to its partner ConocoPhillips in a deal worth up to C$4.44bn ($3.32bn).

The consideration is made up of a cash payment of C$4.03bn ($3bn) upon closing of the deal. It also includes additional payments of up to C$440m ($325m) under certain conditions for the non-operated stake in the asset and related logistics commitments.

The deal is a result of ConocoPhillips exercising its preemption right to buy the remaining 50% stake in the Surmont oil sands project. After the closing of the deal, ConocoPhillips will have full ownership of the asset located in the Athabasca region of northeastern Alberta.

It follows the signing of the C$5.5bn ($4.05bn) deal between Suncor Energy and TotalEnergies in April 2023, under which the former would acquire TotalEnergies EP Canada.

If closed, the deal will give Suncor Energy the remaining 31.23% stake it did not own previously in the Fort Hills oil sands mining project and a 50% interest in the Surmont in situ asset held by TotalEnergies EP Canada (TEPCA).

TotalEnergies stated: “As previously announced, the transaction with Suncor is subject to the waiver of its partner ConocoPhillips pre-emptive right.

“As ConocoPhillips has exercised its preemption right, TotalEnergies will be open to complete a transaction with Suncor regarding the sale of TEPCA’s shares, comprising the Fort Hills working interest, as per the agreed value in the initial SPA.”

The Surmont oil sands asset began production in 2007. In 2021, its net production reached 69 million barrels of oil equivalent per day (MBOED).

ConocoPhillips chairman and CEO Ryan Lance said: “Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio. Upon close, we look forward to leveraging our position as 100% owner and operator of Surmont to further optimise the asset while progressing toward our overall interim and long-term emissions intensity objectives.

“We will remain on track to achieve our previously announced accelerated GHG intensity reduction target of 50-60% by 2030, using a 2016 baseline.”

The closing of the transaction, which is expected to occur in the latter half of this year, is contingent on the receipt of regulatory approvals and other customary conditions.