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Suncor (SU), Indigenous Partners Buy Canadian Pipeline Stake

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Suncor Energy Inc. (SU - Free Report) recently reached agreements with eight indigenous communities in the Regional Municipality of Wood Buffalo (RMWB) to buy the entire 15% equity stake in Canada's Northern Courier Pipeline Limited Partnership held by TC Energy Corporation (TRP - Free Report) .

The partnership, which comprises Suncor, three First Nations, and five Métis communities will hold a 15% interest in this pipeline asset worth roughly C$1.3 billion, which will generate long- term, consistent earnings that will aid the communities for decades ahead.

Suncor will run the pipeline that connects Suncor's Fort Hills oil production in Alberta to its East Tank Farm asset after the acquisition is completed. Suncor stated in a statement that the collaboration is projected to generate gross revenues of around C$16 million per year for its partners and offer stable income. Subject to usual closing conditions and regulatory clearances, the deal is expected to be completed in the fourth quarter of 2021.

The participation of indigenous communities in the deal is financed by non-recourse funding, backed by a loan guarantee of up to C$40 million from the Alberta Indigenous Opportunities Corp.

This cooperation and investment are the product of years of work and talks among all stakeholders. Given the number of Indigenous communities participating in this sort of initiative, this alliance is unparalleled in the industry as an example of economic reconciliation.

As First Nations and the indigenous communities play such an important role in Canada's oil sector, oil and gas companies are actively collaborating with them on various projects. Governments and corporations have a legal obligation to engage with and accommodate First Nations before moving forward with resource projects that impact their lands.

In June, a coalition of leading Canadian oil sands producers, comprising Suncor — currently carrying a Zacks Rank of #3 (Hold) — Canadian Natural Resources (CNQ - Free Report) , Cenovus Energy, Imperial Oil Limited (IMO - Free Report) , and MEG Energy announced a collaboration with local indigenous communities in northern Alberta to achieve net-zero greenhouse gas emissions from their operations by 2050. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Suncor, Canada’s premier integrated energy company, has seen its shares gain 49.5% in a year’s time compared with the industry's growth of 48.3%

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