Suncor Energy (SU), Mikisew Cree First Nation Enter Participation Agreement for East Tank Farm Development

October 18, 2016 6:15 AM EDT

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Suncor and Mikisew Cree First Nation (MCFN) announced the signing of a participation agreement for the purchase by MCFN of a 14.7% interest in Suncor's East Tank Farm Development.

Under the terms of the agreement, MCFN will pay 14.7% of the actual capital cost of the East Tank Farm Development once the assets become operational, which is currently anticipated to be in the second quarter of 2017.

"We are very excited that MCFN has joined us as a partner in the East Tank Farm Development," said Mark Little, executive vice president, Upstream, Suncor. "We have worked closely with MCFN for many years and this type of joint venture partnership is an exciting next step for both of us. Not only will it provide the community with a long term revenue stream, it recognizes the value of relationships, building mutual trust and respect and strengthening the participation of Aboriginal Peoples in energy development."

MCFN's 14.7% share of the actual capital cost of the East Tank Farm Development is currently anticipated to be approximately $147 million which will be payable to Suncor upon closing. The transaction is subject to a number of closing conditions including the negotiation of definitive documentation, the First Nation obtaining suitable financing, due diligence and other conditions customary for transactions of this nature and is anticipated to close in the second quarter of 2017.

Revenue from the long-term terminaling services agreements with the Fort Hills partners will underpin MCFN's independent financing of the transaction. Suncor will be the operator of the East Tank Farm Development once operational.

"The signing of this agreement has great significance for our people. It means long-term financial stability and increased independence while helping ensure future generations of our community remain a partner in regional development," said Chief Steve Courtoreille, MCFN. "We are very pleased to be working together with our partners at Suncor in this business opportunity."

MCFN's equity interest is in addition to the 34.3% equity interest announced in September by Suncor and Fort McKay First Nation. The combined equity interest by Fort McKay First Nation and MCFN in Suncor's East Tank Farm Development is 49%.

The East Tank Farm Development is a Suncor-operated midstream asset currently under construction in the Wood Buffalo Region of Alberta. The facility will consist of bitumen storage, blending and cooling facilities and connectivity to third party pipelines.

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