Suncor to raise $2.5bn to reduce debt and fund Syncrude Canada acquisition

Suncor Energy has announced plans to raise $2.5bn to reduce debt and fund the acquisition for a stake in Syncrude Canada.

As part of its plans, the company proposes to offer 71.5 million common shares from treasury, on a bought deal basis, at a price of $35 per share.

The offering is planned to be made through a syndicate of underwriters led by TD Securities, CIBC Capital Markets and JP Morgan Securities Canada.

Net proceeds will be used for the previously announced acquisition of an additional 5% interest in the Syncrude joint venture (JV) and to reduce outstanding indebtedness.

In April this year, Suncor agreed to acquire the interest from Murphy Oil’s Canadian subsidiary for approximately C$937m ($743m).

The transaction will increase Suncor’s stake in the Syncrude JV from 48.74% to 53.74%.

Suncor has invested approximately $9bn through acquisitions and related future development expenditures over the last nine months.

This resulted in increased, long life production capacity of about 164,000 barrels per day.

The investments have been 60% funded by the issuance of equity including the offering, and the remaining 40% by cash and debt.

Completion of the offering is subject to the receipt of all necessary approvals.

The Syncrude project is a JV undertaking among Canadian Oil Sands Partnership, Imperial Oil Resources, Mocal Energy, Murphy Oil Company, Nexen Oil Sands Partnership, Sinopec Oil Sands Partnership and Suncor Energy Ventures Partnership, as the project owners, and Syncrude, its operator.