Suncor Buys Out Murphy Oil Stake in Canada's Syncrude Oil Sands Consortium

By Chester Dawson 

CALGARY, Alberta -- Suncor Energy Inc., Canada's largest crude-oil producer, said Wednesday that it bought an additional 5% stake in the Syncrude oil sands mining consortium from the local unit of Murphy Oil Corp., boosting its position as the largest owner.

The 937 million Canadian dollar (US$744 million) deal for Murphy Oil's equity, worth the equivalent of 17,500 barrels of oil a day from Syncrude, is expected to close by midyear, Suncor said. It increases Suncor's stake in Syncrude to a controlling 53.74% and consolidates its role as the dominant player in the now five-member consortium.

Syncrude operates two oil sands mines in northeastern Alberta province with a 350,000 barrel per day production capacity. One of the oldest and largest oil sands producers, it has been bedeviled by a series of operating problems in recent years.

"This growth gives us even more leverage to oil prices as they recover," Suncor Chief Executive Steve Williams said in a statement, calling it a strategic fit after the acquisition earlier this year of another Syncrude owner, Canadian Oil Sands Ltd.

Murphy Oil, which bought a stake in Syncrude in 1994, said the transaction allows it to focus on its offshore oil field and unconventional shale oil and natural gas businesses.

"The sale of Syncrude will further place our focus in North America on our unconventional assets while simultaneously strengthening the financial flexibility of our balance sheet," Roger Jenkins, CEO of Murphy Oil, said in a separate statement.

In March, Suncor completed its takeover of Canadian Oil Sands, raising its stake in Syncrude to 48.74% from 12% previously. The Calgary-based company's majority share of Syncrude dwarfs the 25% stake of Exxon Mobil Corp.'s Canadian unit, which is the operator of the consortium's mines.

Other equity owners in Syncrude include two Chinese state-controlled energy majors: China Petroleum & Chemical Corp., also known as Sinopec, holder of a 9% stake; and the Canadian unit of Cnooc Ltd., owner of a 7% position. A subsidiary of Tokyo-based JX Nippon Oil & Energy Corp. owns the remaining 5% share.

Murphy Oil's Canadian assets include nonoperating stakes in two Canadian Atlantic offshore oil projects and shale gas acreage in the Montney Formation of British Columbia.

Write to Chester Dawson at [e-mail]

(END) Dow Jones Newswires

April 27, 2016 21:40 ET (01:40 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.