Suncor boosts stake in Fort Hills oil sands project

Suncor Energy (TSX:SU) is tightening its grip on the Fort Hills oilsands project by paying $310 million to take an additional 10 per cent stake off one of its partners hands.

“With engineering over 90 per cent complete and construction surpassing 40 per cent, Fort Hills is on track, with first oil expected in the fourth quarter of 2017”. On average, equities analysts expect that Suncor Energy will post $1.07 earnings per share for the current fiscal year. Suncor is the developer and operator of the project. Finally, BMO Capital Markets lowered their price target on Suncor Energy from $48.00 to $44.00 and set an outperform rating for the company in a research report on Wednesday, July 1st.

Upon closure of the deal, which is subject to regulatory approvals, Suncor’s stake in the $15 billion project will be 50.8%.

The bitumen deposits in the oil sands are the world’s third-largest crude reserves, but are more expensive to produce than conventional oil because the production requires vast amounts of energy and water.

The deal comes as USA crude prices hover at around US$46 a barrel – around half of where they were a year ago – with no end to the doldrums in sight.

Total Exploration & Production president Arnaud Breuillac said: “As a result of a full comparative analysis of its global asset portfolio in the context of lower oil prices, Total has decided to reduce its exposure to Canadian oil sands projects”.

“This opportunity to acquire an additional interest at a discounted price underscores Suncor’s confidence in its position within the oil sands”, Suncor Chief Executive Steve Williams said in a statement.

Suncor Energy (SU – Get Report) stock is gaining by 1.2% to $26.16 in midday trading on Monday, as oil prices increase following a decline in the USA rig count. Seven equities research analysts have rated the stock with a hold rating and nine have issued a buy rating to the company. Today, you can download 7 Best Stocks for the Next 30 Days.