Conocophillips Currently Holds A 50% Interest As Operator Of Surmont And Will Own 100% Upon Closing; Transaction Will Be Funded From Either Cash, Short- And Medium-Term Financing, Or Combination Of Both; Proposed Deal Also Includes Payments Of Up To $325M
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ConocoPhillips (NYSE:COP) is exercising its preemption right to purchase the remaining 50% interest in Surmont from TotalEnergies EP Canada Ltd. for approximately $3 billion, subject to customary adjustments, as well as contingent payments of up to approximately $325 million. The transaction is expected to close in the second half of 2023.
May 26, 2023 | 4:26 pm
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NEUTRAL IMPACT
TotalEnergies EP Canada Ltd., a subsidiary of TotalEnergies (NYSE:TTE), will sell its remaining 50% interest in Surmont to ConocoPhillips for approximately $3 billion, subject to customary adjustments, as well as contingent payments of up to approximately $325 million.
The sale of the remaining 50% interest in Surmont will provide TotalEnergies with a significant cash inflow of approximately $3 billion, subject to customary adjustments, as well as contingent payments of up to approximately $325 million. However, the impact on TotalEnergies' overall business and stock price is uncertain, as the company has a diverse portfolio of assets and operations.
CONFIDENCE 90
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
ConocoPhillips' acquisition of the remaining 50% interest in Surmont from TotalEnergies EP Canada for $3B will enhance its returns-focused value proposition and support its $11B planned return of capital in 2023.
The acquisition will improve ConocoPhillips' ROCE, lower its free cash flow breakeven, and further support its $11 billion planned return of capital in 2023. The transaction is expected to add approximately $600 million of annual free cash flow in 2024, inclusive of approximately $100 million of annual capex for maintenance and pad development costs.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100