Canadian Natural Resources Ltd. (NYSE: CNQ) said Aug. 31 it will acquire full ownership in the Joslyn oil sands lease from the project’s partners for roughly C$225 million.
The price tag consists of C$100 million cash at closing plus annual cash payments of C$25 million over each of the next five years. The sellers consist of several partners led by operator Total SA (NYSE: TOT).
Total said the Joslyn project partners decided to put its further development on hold following the oil price fall in 2014. Therefore, activities have since been limited to fulfilling regulatory requirements and ensuring the safety of the site.
“Reducing our exposure to Canada’s oil sands by selling this asset is in line with our global strategy to focus our oil investments on low breakeven resources and develop a resilient portfolio in the mid and long term. It is also consistent with the gradual reduction of our stake in the Fort Hills oil sands project in 2017,” Patrick Pouyanné, chairman and CEO of Total, said in a statement.
The Joslyn lease is located directly south of Canadian Natural’s current Horizon oil sands mining and upgrading project in Alberta within the Athabasca region.
Canadian Natural said its acquisition of 100% working interest in the Joslyn oil sands project “adds significant value to the company’s already extensive portfolio of high-quality long life low decline assets and will allow for more effective lease-line development opportunities between the Horizon and Joslyn projects.”
The Joslyn project partners include: Total as operator, 38.25%; Suncor Energy Inc. (NYSE: SU), 36.75%; Joslyn Partnership, 15%; and Inpex Canada Ltd., 10%.
The transaction, subject to regulatory approval, is targeted to close on Sept. 28.
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