Suncor to take $425M impairment charge on White Rose and West White Rose

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CALGARY — The new operator of the White Rose offshore oilfield says no final decision has been made about its future despite a move by partner Suncor Energy Inc. to take a $425-million impairment charge on the value of its stake.

In a news release late Monday, Suncor said the purchase of operator Husky Energy Inc. by Calgary rival Cenovus Energy Inc. has cast doubt on the future of the East Coast project and its partly built $2.2-billion West White Rose extension.

Cenovus announced the close of its all-stock friendly takeover of Husky Energy earlier on Monday.

"The West White Rose 2021 construction season has been cancelled; however, certain scopes of work will progress in 2021," said Cenovus spokeswoman Sonja Franklin in an email.

"The joint venture continues to evaluate its options beyond 2021 and no decisions have been made."

More information about Cenovus' business plans will be issued throughout the course of the year, she said, adding Husky’s 2020 results will be reported in the next couple of months.

The original White Rose project is still producing oil but the West White Rose project is needed to access up to 200 million barrels of crude oil and extend the life of the White Rose field by about 14 years, Suncor said.

In September, Husky put the West White Rose project under review while asking the federal government and the province of Newfoundland and Labrador to make direct investments in it. In October, it confirmed construction would be suspended through 2021.

Suncor said talks are ongoing with Cenovus and various levels of government to determine the future of the project. It said its 2021 guidance is unchanged because it didn't include any major capital spending on West White Rose.

Cenovus holds a 72.5 per cent stake in White Rose, while Suncor owns 27.5 per cent. The West White Rose project owners are Cenovus with 69 per cent, Suncor with 26 per cent and Nalcor, the provincial energy corporation, with five per cent.

This report by The Canadian Press was first published Jan. 5, 2021.

Companies in this story: (TSX:SU, TSX:CVE)

The Canadian Press