Teck Announces Sale of Fort Hills Interest
Teck Resources Limited announced today it has agreed to sell its 21.3% interest in the Fort Hills Energy Limited Partnership (“Fort Hills”) and certain associated downstream assets to Suncor Energy Inc. (“Suncor”) for gross proceeds of approximately $1 billion in cash, subject to customary closing adjustments reflecting a November 1, 2022 effective date. The transaction value is consistent with the current outlook for the Fort Hills business reflected in the most recent in-depth review of Fort Hills conducted by Suncor and the resulting long-range plan for the project.
“This transaction advances our strategy of pursuing industry leading copper growth and rebalancing our portfolio of high-quality assets to low carbon metals,” said Jonathan Price, CEO. “We will review the use of proceeds in accordance with our capital allocation framework early in 2023.”
Jonathan Price was appointed Chief Executive Officer of Teck on September 30, 2022, and has been a member of Teck’s Board of Directors since July 26, 2022. Previously, Mr. Price was Executive Vice President and Chief Financial Officer having joined Teck in October 2020.
Closing of the transaction is subject to customary conditions including receipt of relevant regulatory approvals, and is expected to occur in the first quarter of 2023.
As a result of the transaction, Teck expects to record an after-tax, non-cash impairment charge of approximately $950 million in the third quarter of 2022.
RBC Capital Markets and J.P. Morgan Securities Canada have acted as financial advisors to Teck in connection with this transaction.
Upon closure of the deal, Calgary-based Suncor, which is the operator of Fort Hills, will see its stake in the oilsands project increase to 75.4 per cent. TotalEnergies will own the remaining 24.6 per cent.
“The acquisition of an additional interest in Fort Hills meets our return objectives, builds upon our strategy to optimize our portfolio around our core operated assets and underscores Suncor’s confidence in the long-term value of the Fort Hills project,” said Suncor interim president and CEO Kris Smith in a news release.
The Fort Hills oilsands mine began operation in 2018 but has been dogged by difficulties.