In a trade with Calgary’s Cenovus Energy Inc., BP plc is building its prospects offshore Eastern Canada and selling its half-stake in the Sunrise oilsands project. 

BP deal

Total consideration includes C$600 million cash and a variable C$600 million payment over two years. BP is gaining the 35% stake that Cenovus has in the Equinor ASA-led Bay du Nord project. The 200,000 boe/d project is offshore Newfoundland and Labrador, about 300 miles east of St. John’s. 

“This is an important step in our plans to create a more focused, resilient and competitive business in Canada,” said BP’s Starlee Sykes, senior vice president, Gulf of Mexico & Canada. “Bay du Nord will add sizable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador. 

Along with BP’s active Canadian marketing and trading business, this will position BP Canada for strong future growth.”

Bay du Nord consists of several discoveries in the Flemish Pass Basin. The project area is in water depths of around 1,200 meters. Recoverable reserves are estimated to be about 300 million boe. 

The trade, set to be completed before year’s end, would give Cenovus full control of the Sunrise oilsands project, which it operates. Sunrise is 40 miles east of Fort McMurray in Alberta. It employs steam-assisted gravity drainage to produce bitumen with nameplate capacity of 60,000 b/d.

“Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimization opportunities available,” said Cenovus CEO Alex Pourbaix. “By applying Cenovus’s advanced operating techniques, we expect to increase production at Sunrise while driving down sustaining capital, operating costs and emissions intensity.”

BP already has stakes in six exploration licenses in the offshore eastern Newfoundland region. Subsidiary BP Canada Energy Group ULC also holds offshore exploration licenses in the Orphan Basin and is planning to drill an initial exploration well called Ephesus in 2023.