Major British oil company bp has agreed to sell its 50% non-operated interest in the Sunrise oil sands project in Alberta, Canada, to Calgary-based Cenovus Energy.

The transaction's total value includes C$600 million ($466 million) cash, a contingent payment with a maximum aggregate value of C$600 million expiring after two years.

Under the deal, bp will also receive Cenovus’s 35% stake in the undeveloped Bay du Nord project offshore Newfoundland and Labrador. The Bay du Nord (BdN) project consists of several oil discoveries in the Flemish Pass Basin, some 500 km northeast of St. John’s in Newfoundland and Labrador, Canada. By doing so, bp will increase its acreage position offshore Eastern Canada.

 “This is an important step in our plans to create a more focused, resilient and competitive business in Canada. Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador. Along with bp’s active Canadian marketing and trading business, this will position bp Canada for strong future growth,” said Starlee Sykes, bp senior vice president, Gulf of Mexico & Canada

In Canada, bp will no longer have interests in oil sands production and will shift its focus to future potential offshore growth. bp currently holds an interest in six exploration licenses in the offshore Eastern Newfoundland Region. The non-operated stake in the Bay du Nord project will expand bp’s position offshore Eastern Canada. 

The project area is in water depths of approximately 1,200m, with recoverable reserves estimated to be about 300 million barrels of oil.

The Sunrise oil sands project, operated by Cenovus, is located 40 miles east of Fort McMurray, Alberta and employs steam-assisted gravity drainage to produce bitumen. It has a nameplate capacity of 60,000 bbls/day. 

Subject to regulatory approvals, the transaction is expected to close in 2022.