Suncor Energy Inc. (TSX:SU) agreed to acquire an additional 21.3% equity stake in Fort Hills Energy Limited Partnership from Teck Resources Limited (TSX:TECK.B) for approximately CAD 1 billion on October 26, 2022. Suncor Energy is paying consideration in cash, subject to customary closing adjustments reflecting a November 1, 2022 effective date. Under the terms of agreement, Suncor Energy is acquiring 21.3% stake in Fort Hills Energy Limited Partnership along with certain associated downstream assets. Upon closing, SuncorÆs aggregate share in the project will increase to 75.4%. The acquisition will be funded by cash from asset sale processes currently underway and the company remains on track with its previously articulated capital allocation framework. This acquisition is a part of our Base Plant mine replacement strategy, where Fort Hills meets our return objectives, builds upon our strategy to optimize our portfolio around our core operated assets and underscores SuncorÆs confidence in the long-term value of the Fort Hills Project. With the completion of the purchase agreement, the Fort Hills Energy LPÆs partners will include Suncor and its affiliate (holding an aggregate 75.4% interest) and TotalEnergies EP Canada Ltd. (24.6% interest). Suncor is the operator of the Fort Hills Project through an operating services contract.
The transaction is subject to customary closing conditions, including regulatory approval under the Competition Act and is anticipated to close in the first quarter of 2023. The use of proceeds will be reviewed in accordance with our capital allocation framework early in 2023. As a result of the transaction, we expect to record an after-tax, non-cash impairment charge of approximately CAD 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. Sean Vanderpol, Benjamin S. P. Hudy, Chrysten E. Perry and Michael Kilby of Stikeman Elliott LLP acted as legal advisor to Teck Resources Limited (TSX:TECK.B).
Suncor Energy Inc. (TSX:SU) completed the acquisition of an additional 14.65% equity stake in Fort Hills Energy Limited Partnership from Teck Resources Limited (TSX:TECK.B) for approximately CAD 690 million on February 2, 2023. As a result of this transaction, Suncor and its affiliateÆs aggregate share in Fort Hills is 68.76%.