BP announced it will buy Cenovus Energy's 35% stake in the undeveloped Bay du Nord project in the Flemish Pass offshore Canada's Newfoundland and Labrador.
As part of the deal announced on Monday, BP will also sell its 50% non-operated interest in the Sunrise oil sands project to Calgary-based Cenovus, marking the British energy giant's exit from oil sands production as it shifts focus to "future potential offshore growth". BP currently holds an interest in six exploration licenses in the offshore Eastern Newfoundland Region.
Starlee Sykes, bp senior vice president, Gulf of Mexico & Canada, said, “This is an important step in our plans to create a more focused, resilient and competitive business in Canada. Bay du Nord will add sizeable 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.”
Total consideration for the transaction includes C$600 million cash, a contingent payment with a maximum aggregate value of C$600 million expiring after two years, and Cenovus’s 35% position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador. Subject to regulatory approvals, the transaction is expected to close in 2022.
The Bay du Nord project (BdN) consist of several oil discoveries some 500 kilometers northeast of St. John’s, Canada. The first discovery was made by operator Equinor in 2013, followed by additional discoveries in 2015, 2016 and 2020.
Confirmed discoveries in 2020 in adjacent exploration license EL1156 (Cappahayden and Cambriol East, in which BP is also Equinor’s partner) are potential tie-ins in a joint project development. The Bay du Nord discovery is at a water depth of approximately 1,170 meters while the new discoveries are at approx. 650 water depth.
Equinor is considering developing the Bay du Nord field using a floating production unit for storage and offshore offloading (FPSO), which also is a suited solution for tie-back of adjacent discoveries and future prospects.
According to Equinor, the optimization of the Bay du Nord development project is ongoing to make it more robust for future market and evaluation to include confirmed new discoveries in adjacent license EL1156 (Cappahayden and Cambriol East). Two additional exploration wells are planned to be drilled at the Cambriol East and Sitka prospects in 2022.
Equinor said it is working toward a final investment decision (FID with first oil expected to be produced in the late 2020s.