France’s TotalEnergies plans to spin off Canadian oil sands assets

At an investor presentation in New York, TotalEnergies said the proposal would be subject to a shareholder vote at its next annual general meeting in May 2023.

The spin-off would include TotalEnergies’ 24.58% stake in the Fort Hills oil sands mining project in northern Alberta and its 50% stake in the Surmont thermal project, as well as midstream and trading-related activities.

Canada’s oil sands hold some of the world’s largest crude reserves but are more carbon-intensive and costly to produce than many conventional oil projects worldwide. Total has been trying to exit the region for several years and in 2020 wrote down C$9.3 billion ($6.83 billion) worth of oil sands assets.

“We are not the best shareholder of these assets because as we have a climate strategy, we don’t want to invest in these assets,” Chief Executive Patrick Pouyanne said.

Pouyanné told investors TotalEnergies had decided on a spin-off because the process would not depend on finding a buyer. The company will maintain a minority stake in the spin-off temporarily to smooth the transition.

TotalEnergies’ oil sands assets will generate $1.5 billion of cash flow in 2022, he added.

Suncor Energy, which is the majority-owner of Fort Hills, and ConocoPhillips, the co-owner of Surmont, did not immediately respond to requests for comment.