Suncor Energy (SU) Will Not Proceed with Voyageur; Sees Q1 Charge

March 27, 2013 5:23 PM EDT
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Suncor Energy, Inc. (NYSE: SU) announced that it is not proceeding with the Voyageur upgrader project. The decision is the result of a joint strategic and economic review launched by Suncor and its joint venture partner Total E&P Canada Ltd in late 2012.

"Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project," said Steve Williams, president and chief executive officer. "That's why we undertook a thorough review of the project to determine whether it met our criteria for long-term, profitable growth."

"This decision is in line with our commitment to capital discipline and our stated plan to allocate capital with priority given to developing higher-return growth projects and accelerating the return of cash to shareholders through dividends and share buybacks."

As a result of not proceeding with the Voyageur upgrader project, Suncor expects to incur a charge to first quarter 2013 net income and cash flow from operations of approximately $140 million and $180 million respectively.

On March 27, 2013, Suncor acquired Total E&P Canada Ltd.'s interest in the Voyageur Upgrader Limited Partnership for $515 million to gain full control over the partnerships assets.

"We are pleased with the value this deal provides to Suncor," said Williams. "Among other things, we will now be able to exclusively utilize the partnership assets to continue driving value from our base business and to support our profitable oil sands growth."

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