Suncor Energy ( SU Quick Quote SU - Free Report) and partners reached a tentative agreement to restructure the ownership of the Terra Nova offshore oil project, which has been unproductive since December 2019.
Discovered in 1984, Terra Nova is an oilfield development project, located 350 kilometers off the coast of Newfoundland. Notably, the field operates with the help of a series of wells drilled into the seabed and is connected to a Floating Production Storage and Offloading (“FPSO”) vessel through a network of cables and pipes.
Since late 2019, the production from the Terra Nova field has been offline as the authority for the province ordered shutdown of operations due to Suncor's violation of obligations regarding the excess fire water pumps on the FPSO. Hence, the company was planning to decommission the project as the pandemic-led disruptions prevented the planned dry dock work of the Terra Nova FPSO.
However, Suncor and Terra Nova co-owners agreed to shuffle their shares to save the troubled project and extend its life. Suncor, the operator of the field, will increase its stake to 48% from about 38%. Moreover, the partners will provide short-term funding for the Asset Life Extension Project in order to achieve sanction. Notably, the project was aimed at extending the production life and capture nearly 80 million barrels of oil.
The announcement came after the company was expected to present a verdict about whether the field would be shut forever. Despite the setbacks, Suncor continued to explore the possibilities to achieve economic returns for investors and support jobs for Newfoundlanders and Labradorians. While the tentative agreement is not ensured, it sets a path forward to secure a return to service in years to come.
Meanwhile, the agreement is still subject to finalized terms and approval from all parties, which include the approval from the board of directors where appropriate, and is contingent upon an estimated $500 million in royalty and financial support from the provincial government. Notably, Suncor and the newly-restructured partners will make a decision to proceed with the work required to extract the remaining barrels of oil from the seabed.
Company Profile & Price Performance
Headquartered in Calgary, AB, Suncor is a premier integrated energy company.
Shares of the company have outperformed the
industry in the past six months. Its stock has gained 41% compared with the industry’s 33.8% growth.
Image Source: Zacks Investment Research Zacks Rank & Other Stocks to Consider
The company currently flaunts a Zack Rank #1 (Strong Buy).
Some other top-ranked players in the energy space are
Halliburton Company ( HAL Quick Quote HAL - Free Report) and PDC Energy, Inc. ( PDCE Quick Quote PDCE - Free Report) and NOW Inc. ( DNOW Quick Quote DNOW - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Halliburton’s earnings for 2021 are expected to increase 47.7% year over year.
PDC Energy’s earnings for 2021 are expected to rise 21% year over year.
NOW’s earnings for 2021 are expected to surge 3,320% year over year.
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