Total continues its retreat from the oil sands

Total continues its retreat from the oil sands

Canadian Natural Resources has agreed to purchase the Joslyn oil sands project from French energy major Total for $225 million in cash. CNRL has agreed to pay $100 million up front, with $25 million to be paid annually over the next 5 years.

The Joslyn lease is located directly south of CNRL's Horizon Mine. The company did not disclose development timelines for Joslyn but says the purchase "will allow for more effective lease-line development opportunities" between the two mines. 

Total purchased Joslyn from Deer Creek in 2005. The company shelved plans to develop the lease in 2014, after oil prices began free-falling and capital costs ballooned to $11 billion.

The Paris-based producer was recently involved in a scuffle with Suncor Energy over cost overruns at its newly minted Fort Hills mine. The company sold a 10% stake in Fort Hills to Suncor back in 2015 and divested another 3% stake earlier this year to settle unpaid bills at the oil sands mine. Total still has a 26% stake in Fort Hills and a 50% stake in the Surmont SAGD facility, operated by JV partner ConocoPhillips. The company has repeatedly expressed desires to exit its oil sands operations, reported to be among the least economically-viable assets in its portfolio. 

CNRL expects this latest transaction to close at the end of September.

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