Canadian Natural Resources to buy Joslyn oil sands project for $172m

Canadian Natural Resources (CNRL) has signed an agreement with Total to acquire the Joslyn oil sands project for C$225m ($172.4m).

The total cash consideration involves an initial fee of C$100m ($76.62m) followed by annual cash payments of C$25m ($19.15m) over the next five years.

The Joslyn project is located directly south of CNRL’s current Horizon oil sands mining and upgrading project in Alberta, Canada.

CNRL expects the acquisition to strengthen its portfolio of high-quality, long-life low decline assets.

Furthermore, the transaction is expected to create more effective lease-line development opportunities between the Horizon and Joslyn projects.

Total and its partners indefinitely put on hold further development of the Joslyn project in 2014 on account of a dip in oil prices.

Since then, the partners restricted activities at Joslyn oil sands to meet regulatory requirements and look after the project site.

Total chairman and CEO Patrick Pouyanné said: “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 break-even 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.”

Subject to approval of the Canadian Competition Bureau, the transaction is anticipated to be closed towards the end of this month.

Total is the operator of the Joslyn project with a 38.25% interest, while the remaining stake is owned by partners Suncor Energy Joslyn Partnership (36.75%), Joslyn Partnership (15%) and Inpex Canada Ltd (10%).

In Canada, the company also owns a 24.58% interest in Fort Hills, and a 50% stake in Surmont project.

Last year, Total produced 59,000 barrels of oil per day from its Canadian operations.