TotalEnergies announced on Thursday that it has accepted an offer to sell its Canadian assets to Suncor Energy. The $4.1bn (CAD5.5bn) sale has potential additional payments of up to $450m (CAD600m).

The company initially planned to spin off the oil sands element of its business but chose to accept one of a series of unsolicited offers. The sale will close around the end of the third quarter.

Speaking at a press conference on Thursday, CEO Patrick Pouyanné said that Canadian energy company Suncor would “divert the assets straight away”.

TotalEnergies also announced its financial results for Q1 2023 on Thursday, which Pouyanné described as a “very strong” quarter.

The company’s first quarter adjusted net income fell by 27% to $6.5 billion. Jean-Pierre Sbraire, chief financial officer, partly attributed the volatility to “uncharacteristically mild weather across Europe”.

TotalEnergies to turn its focus away from oil sands

TotalEnergies plans to distribute at least 40% of the cash flow generated this year to shareholders through a share buyback or special dividend. Pouyanné confirmed this on Thursday stating: “Part of the proceeds [from the Suncor sale] will go to shareholders”.

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By GlobalData

Analysts have interpreted TotalEnergies’ sale as a move away from fossil fuels and towards low-carbon alternatives. During Thursday’s press conference, Sbraire said that the company’s renewable investments were key profit generators for Q1 2023. He went on: “Last year was heavily influenced by the huge increase in supply costs, but this year has been better.”

The company saw an adjusted EBITDA of $14.2bnand a return of average capital employed of 25%, according to its results. TotalEnergies claimed that rising oil prices following production cuts from the Organisation of Petroleum Exporting Countries (OPEC) led to an oil price of $80 per barrel.

Suncor, who will acquire TotalEnergies’ oil sands, have recently been put under investigation by Canadian authorities following wildlife deaths in its tailings pond.

Rich Kruger, Suncor’s CEO, said in a statement that the acquisition of TotalEnergies Canadian assets are “a strategic fit for us and add long-term shareholder value. The acquisition also introduces flexibility and optionality into our long-range capital plan, providing us with further discretion in respect of the timing and scope of future oil sands developments”.