BP Sells Oil Sands to Cenovus

BP Plc sold out of Canada’s oil sands, divesting its stake in the Sunrise project to Cenovus Energy Inc. while acquiring offshore exploration from the same company in the east of the country.

The oil-sands disposal aligns with BP’s plans to divest polluting projects as investors demand greater efforts to tackle climate change. Companies such as Shell Plc and ConocoPhillips have also offloaded such ventures, which have a particularly high carbon footprint because of the energy required to extract bitumen from deposits underground. 

Cenovus agreed to buy BP’s 50% interest in Sunrise for C$600 million ($467 million) in cash and a contingent payment of as much as C$600 million which expires after two years. The Calgary-based company will also hand over its 35% interest in the Bay du Nord oil project off Newfoundland and Labrador.

BP was down 2.6% in London while Cenovus dropped 3.8% in Toronto as of 9:49 a.m. New York time. 

“This is an important step in our plans to create a more focused, resilient and competitive business in Canada,” BP Senior Vice President for the Gulf of Mexico and Canada Starlee Sykes said in a statement. “Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio.”

The offshore oil project, operated by Equinor ASA, won Canadian government approval earlier this year despite environmental opposition. The $12 billion development is estimated to have recoverable reserves of around 300 million barrels of oil.

BP plans to reduce its total oil and gas production 40% by 2030 and says it will focus on “resilient hydrocarbons” -- those which have a lower cost and carbon footprint. The London-based major has also said it will no longer explore for fossil fuels in new countries.