Suncor eyes sale of international properties as Enerplus unloads Canadian assets

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Chris Varcoe: This is a story of two Calgary-based energy companies moving in different directions, geographically speaking

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This is the story of two Calgary-based energy companies moving in different directions, geographically speaking.

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As oil sands giant Suncor Energy Inc. considers selling some of its international properties, mid-tier producer Enerplus Corp. is looking to get rid of all of its Canadian assets.

Calgary-based Enerplus, which has been growing its presence in North Dakota’s Bakken light oil basin for years, said Wednesday it would seek to complete the successful divestiture of all of its Canadian oil and gas properties by the middle of 2022.

“They’re good assets and they have free cash flow, but it’s just becoming a smaller part of the business. Strategically, we want to continue to focus our business on the Bakken,” Enerplus Chief Financial Officer Jodi Jenson Labrie said Thursday.

“We are maintaining our head office in Calgary. A significant number of people from the Calgary office support our US operations and will continue to do so.

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The company has about 200 workers in Canada, including 150 in Calgary. It also has an office in Denver.

If its Canadian properties, which stretch from northwest Alberta to southern Saskatchewan, are all sold, it could potentially affect 30 to 40 jobs in the city, she said.

The company will maintain its listing on the Toronto Stock Exchange.

“We see a lot of advantages in the location and in the Calgary office,” added Jenson Labrie. “When we’re looking for talent, we can actually access talent from both sides of the border.”

But the decision marks a new beginning for Canada.

During the fourth quarter, Enerplus’ production averaged 128,000 barrels of oil equivalent (boe) per day. Production from Alberta and Saskatchewan accounted for only 7% of the total.

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An Enerplus drilling operation in North Dakota Bakken.
An Enerplus drilling operation in North Dakota Bakken. Photo by Enerplus document/files

In November, the company said more than 80% of its $500 million capital budget this year would be directed to North Dakota; its Canadian properties were online for less than six percent.

Founded in 1986 as the nation’s first oil and gas royalty trust, Enerplus Resources Fund corporatized in 2011.

It once owned oil sands assets but repositioned its portfolio by acquiring properties in the Marcellus and Bakken shale formations in the United States.

Enerplus made its first foray into the United States in 2005, buying Dallas-based Lyco Energy for $509 million and acquiring operations in North Dakota and Montana.

The focus on the south has increased over the past year.

Last January, it purchased Bruin E&P for US$465 million, adding about 24,000 boe per day from the Williston Basin in North Dakota. In April, it spent $312 million to buy assets in the area from Hess Corp.

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“I wouldn’t read anything about their view of Canada. They’re keeping the head office here,” said analyst Patrick O’Rourke at ATB Capital Markets.

I wouldn’t read anything about their point of view on Canada

Patrick O’Rourke

“They’re trying to focus where they find their greatest success right now.”

As Enerplus seeks to expand in the United States, oil sands giant Suncor is examining the fate of some of its international properties.

The company, which released its fourth-quarter results on Wednesday, produced 743,000 boe per day in the last three months of last year, down from 769,000 in the year-ago quarter.

The decline is due to lower production from its exploration and production assets and the effect of the sale of its development in the Golden Eagle region of the UK’s North Sea.

The company pumped nearly 30,000 boe a day from its international assets in the fourth quarter, up from 41,000 a year earlier.

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Suncor Energy Chief Operating Officer Mark Little during a tour of the Fort Hills oil sands project on September 10, 2018.
Suncor Energy Chief Operating Officer Mark Little during a tour of the Fort Hills oil sands project on September 10, 2018. Photo by Vincent McDermott/Fort McMurray Today/Postmedia Network Files

Suncor CEO Mark Little said the company is considering selling part of Britain’s North Sea Rosebank oilfield, a proposed project 130 kilometers off the Shetland Islands that is moving closer to sanction.

Last month, Bloomberg News reported that Suncor was marketing exploration and production assets in Norway.

Asked Thursday during an analyst call about the longevity of the company’s international portfolio, Little noted that Suncor’s oil sands operations are concentrated in northern Alberta.

The international properties offer “great diversification” to the company and exposure to global oil prices.

“Over time, we continue to refine and optimize our core business,” he said.

“So we are testing the waters on a few of these assets.”

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It’s no surprise to see Suncor examining its portfolio.

The heart of the story for some time now has been the oil sands and refining

matt murphy

International properties were only a small part of the broader activity, with Suncor able to realize value by entering businesses at an early stage and then selling them later, analyst Matt said. Murphy of investment bank Tudor, Pickering Holt & Co.

“It’s certainly not what we, and investors, would consider to be central to the story,” Murphy said. “The central part of the story for some time now has been oil sands and refining.”

With higher oil prices and producers focused on returning cash to shareholders, this could be a busy time for asset sales in the oil sector.

Imperial Oil and ExxonMobil Canada announced last month that they were marketing their co-ownership in XTO Energy Canada, which has assets in the Montney and Duvernay regions of Alberta.

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“We felt it was appropriate to test the market,” Imperial CEO Brad Corson said on a call with analysts this week.

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“There is a lot of interest.”

In December, Cenovus Energy sold its Tucker thermal oil sands development to Strathcona Resources for $800 million.

Expect more sales to come.

“It’s going to be tough,” O’Rourke said.

“Companies have the capacity to do much more than they have done in recent years. This creates a favorable situation for asset trading.

Chris Varcoe is a columnist for the Calgary Herald.

[email protected]

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