News | May 26, 2023

ConocoPhillips Provides Notice That It Is Exercising Its Preemption Right To Purchase The Remaining 50% Interest In Surmont

ConocoPhillips today announced that it is exercising its preemption right to purchase the remaining 50% interest in Surmont from TotalEnergies EP Canada Ltd. for approximately $3B (CAD$4B), subject to customary adjustments, as well as contingent payments of up to approximately $325M (CAD$440M). ConocoPhillips currently holds a 50% interest as operator of Surmont and will own 100% upon closing. This transaction is subject to regulatory approvals and other customary closing conditions.

"Today’s announcement reflects our ongoing commitment to enhance our returns-focused value proposition, improving our ROCE, lowering our free cash flow breakeven and further supporting our $11B planned return of capital in 2023,” said Ryan Lance, chairman and chief executive officer. “Long-life, low sustaining capital assets like Surmont play an important role in our deep, durable and diverse low cost of supply portfolio. Upon close, we look forward to leveraging our position as 100% owner and operator of Surmont to further optimize the asset while progressing toward our overall interim and long-term emissions intensity objectives. We will remain on track to achieve our previously announced accelerated GHG intensity reduction target of 50-60% by 2030, using a 2016 baseline.”

The transaction is expected to close in the second half of 2023, with an effective date of April 1, 2023, and will be funded from either cash, short- and medium-term financing, or a combination of both. The transaction is subject to contingent payments for a five-year term of up to approximately $325M (CAD$440M) representing $2M (CAD$2.7M) for every dollar that WCS pricing exceeds $52 per barrel during the month, subject to certain production targets being achieved. Additionally, the transaction is structured as an asset purchase and the tax pools will be commensurate with the purchase price of the asset, including associated contingent payments.

Based on $60 WTI, the transaction will add approximately $600M of annual free cash flow in 2024, inclusive of approximately $100M of annual capex for maintenance and pad development costs. Since 2016, Surmont's GHG emissions intensity has declined by about 20%, and ConocoPhillips has plans for future emissions reduction by applying both current and new technology. ConocoPhillips is also a member of the Pathways Alliance, working to advance carbon capture and storage in Alberta.

About ConocoPhillips
ConocoPhillips is one of the world’s leading exploration and production companies based on both production and reserves, with a globally diversified asset portfolio. Headquartered in Houston, Texas, ConocoPhillips had operations and activities in 13 countries, $91B of total assets and approximately 9,600 employees at March 31, 2023. Production averaged 1,792 MBOED for the three months ended March 31, 2023, and proved reserves were 6.6 BBOE as of Dec. 31, 2022. For more information, visit

Source: ConocoPhillips