Suncor to explore sale of Petro-Canada after strategic review

Suncor Energy Inc. has agreed to explore the sale of Petro-Canada, a retail business it acquired nearly a decade ago, after a strategic review. The decision comes as Suncor looks to focus on its core oil and gas production business.

The company announced the strategic review following pressure from U.S.-based activist investor Elliott Management Corp.,  which holds a 4% stake in Suncor.

Petro-Canada operates more than 1,500 gas stations across Canada, as well as a refinery in Edmonton. It also has a minority stake in the Hibernia offshore oil project in Newfoundland and Labrador. The fuel retail network could potentially yield CAD7.7 billion (USD5.9 billion) to CAD8.9 billion (USD6.8 billion). 

Suncor acquired Petro-Canada in 2009 in a deal valued at CAD19 billion (USD14.7 billion). The company said it will begin a strategic review of Petro-Canada “with a view to maximizing value for shareholders.” Suncor says it will consider all options for Petro-Canada, including a sale, joint venture or minority investment.

The changes at Canada’s largest oil sands producer based in Calgary, Canada, follow the recent departure of Mark Little as chief executive officer. Little resigned after a worker was killed in an accident at Suncor’s base plant in northern Alberta, the latest in a string of fatalities that Elliott had highlighted as a problem of corporate culture.

Suncor Board Chair Michael Wilson said “the Board’s review of the retail business builds on our long standing commitment to openly consider alternatives to enhance shareholder value and will help  ensure the company is well positioned for even greater success and value creation in the future.” 

“The top priority for Suncor’s leadership team is forging ahead with our plans to improve our safety and  operating performance,” said Kris Smith, Suncor interim chief executive officer. “I look forward to working with  the Board, including our new directors, to advance our efforts to drive long-term shareholder value, and to communicating our progress, delivering on our debt reduction and other capital allocation targets and  restoring confidence in Suncor.” 

As part of its agreement with Elliott Management Corp., Suncor has appointed the following three new independent  directors to its Board, effective immediately: 

• Ian Ashby, former president of BHP Billiton’s Iron Ore Customer Sector Group, who brings extensive global experience in surface mining, including technical and operational expertise;  

• Chris Seasons, former president of Devon Canada and partner with ARC Financial Corporation;  and  

• Jackie Sheppard, former executive vice president, Corporate and Legal Affairs with Talisman  Energy Inc.