Suncor Energy and Fort McKay First Nation announce agreement for equity partnership in East Tank Farm Developments
Suncor and Fort McKay First Nation today announced the signing of a participation agreement for the purchase and sale of a 34.3% equity interest in Suncor's East Tank Farm Development to Fort McKay First Nation.
Under the terms of the agreement, Fort McKay First Nation will pay 34.3% of the actual capital cost of the East Tank Farm Development once the assets become operational, which is currently anticipated to be in the second quarter of 2017.
"The signing of this participation agreement is the result of many years of hard work and discussions to understand and identify areas of mutual interest. Through this process we developed greater understanding and trust, and we worked collaboratively to achieve this. I'm extremely proud that Suncor and Fort McKay First Nation have partnered on this historic and progressive deal," said Mark Little, executive vice president, Upstream, Suncor. "This agreement demonstrates a very positive evolution in our long-term relationships and a new way that we will work together."
Fort McKay First Nation's 34.3% share of the actual capital cost of the East Tank Farm Development is currently anticipated to be approximately $350 million which will be payable to Suncor upon closing. The transaction is subject to a number of closing conditions including the negotiation of definitive documentation, First Nations obtaining suitable financing, due diligence and other conditions customary for transactions of this nature and is anticipated to close in the second quarter of 2017.
Revenue from the long-term terminaling services agreements with the Fort Hills partners will underpin Fort McKay First Nation's independent financing of the transaction. Suncor will be the operator of the East Tank Farm Development once operational.
"This deal clearly shows industry that our people are integral players in business and we have the ability and means to build strong relationships. We believe our investment in this project demonstrates our support of Suncor's continued willingness to forge a long-term business relationship," says Chief Jim Boucher, Fort McKay First Nation. "Fort McKay First Nation has been engaged in the oilsands business for over 30 years and we have the ability to build and maintain sustainable relationships with our neighbours. The investment we make today is an investment that will endure for the long-term benefit of our community."
The East Tank Farm Development is a Suncor-operated midstream asset currently under construction in the Wood Buffalo Region of Alberta. The facility will consist of bitumen storage, blending and cooling facilities and connectivity to third party pipelines.