The Chronicle Herald (Provincial)
Suncor doubts West White Rose’s future
Energy company records $425-million impairment charge
Suncor Energy is writing down the value of its minority stake in Newfoundland's White Rose offshore oilfield and the West White Rose project, reflecting uncertainty after project lead Husky was bought by Cenovus.
Suncor announced Monday evening it recorded an after-tax impairment charge of $425 million on its share of the existing White Rose field and the West White
Rose project for the fourth quarter of 2020. Work on West White Rose was suspended last year, and it is now in warm-idle mode with no guarantee construction will ever resume.
The impairment charge reflects worries about oil
markets but also concerns arising from Husky's change in ownership.
"While the asset is currently producing, the West White Rose Project was intended to access 200 million barrels (gross) of crude oil and extend the life of the
White Rose field by approximately 14 years," Suncor said in a news release.
"However, the recent acquisition of the operator has cast significant doubt on the future of the West White Rose Project."
Earlier Monday, Cenovus Energy announced its acquisition of Husky Energy, the operator of West White Rose, had closed. Husky common shares and preferred shares were expected to be delisted at the close of market on Tuesday.
Cenovus now becomes Canada's third-largest crude oil and natural gas producer. According to a news release, more details about the company's future will be made public in late January when it unveils the 2021 capital budget and updated corporate guidance.
Last month, the government of Newfoundland and Labrador announced a $41.5-million investment that Husky would match to maintain 331 jobs and keep open the possibility of a construction restart in 2022. Work on a 210,000-tonne concrete gravity-base structure in Argentia was about 60 per cent complete when construction work ceased last March. Suncor said in its release that talks with the operator and multiple levels of government about West White Rose's future are ongoing.
"Suncor's 2021 guidance remains unchanged as the White Rose field will remain on line producing as expected and Suncor's guidance did not include any major capital spend on the West White Rose Project in 2021," the company added in the release.
Suncor owns 27.5 per cent of the White Rose field and 26 per cent of the West White Rose project. Cenovus is now the majority owner and operator for both (72.5 per cent for White Rose and 69 per cent for West White Rose). Provincial Crown corporation Nalcor Energy holds five per cent of West White Rose.