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Image courtesy of Lawrence Sauter/ Statoil.

Norway’s Statoil confirmed on Thursday that it has sold its Canadian oil sands business.

Statoil said it has signed an agreement to divest its 100 percent owned Kai Kos Dehseh (KKD) oil sands projects in Alberta to Athabasca Oil Corporation.

The transaction covers the producing Leismer demonstration plant and the undeveloped Corner project, as well as a “number of midstream contracts associated with Leismer’s production,” Statoil.

Following the transaction, Athabasca will take over operatorship of Leismer and Corner and Statoil will no longer operate any oil sands assets.

The total consideration of the transaction to Statoil is up to $622.31 million (CAD 832 million).

That amount includes a cash consideration of $325.37 million and $109.95 million to be paid in the form of 100 million common shares in Athabasca.

“Statoil’s share position, constituting just below 20 percent of the equity in Athabasca, will be managed as a financial investment,” Statoil said.

In addition, up to $186.99 million will be paid in a series of contingent payments.

In total, 80 percent of the consideration will be in cash elements.

“This transaction corresponds with Statoil’s strategy of portfolio optimization to enhance financial flexibility and focus capital on core activities globally, including offshore Newfoundland, Canada. We consider Athabasca a prudent operator and very well placed to take these assets forward,” Statoil Executive Vice-President for Development & Production International Lars Christian Bacher said.

Statoil entered KKD through the acquisition of North American Oil Sands Corporation in 2007.

In 2011, Thailand’s PTTEP acquired a 40 percent interest, and in 2014 Statoil and PTTEP agreed to divide their respective interests in KKD.

Statoil has continued as operator and 100 percent owner for the Leismer and Corner projects.

Statoil said the divestment will trigger an impairment of $500 to $550 million, excluding negative currency effects from the CAD-USD exchange rate at closing.

The effective date of the transaction is January 1, 2017.

Closing is subject to the satisfaction of certain conditions precedent, including regulatory approvals.