CALGARY, A.B. – Suncor Energy Inc. is planning to sell all or parts of its Ontario wind power business following the $1.13-billion divestiture of its lubricants business Monday.
According to an article in the Financial Post, Suncor announced yesterday morning that it had sold its Petro-Canada-branded lubricants business to Dallas-based HollyFrontier Corporation for $1.13 billion. Analysts are saying that the company will now focus on selling off parts of its renewable energy portfolio.
Suncor confirmed that is has plans to sell all or parts of its wind power assets in Ontario, but would hold onto its wind power assets in Alberta and Saskatchewan.
Citi Research analyst Fernando Valle said the company has already exceeded that target given the sale of its lubricants business and the recent sale of interests in its oil storage facilities near Fort McMurray.
Valle said the company is not under any pressure to sell off the wind-power assets or to launch a sales process for other assets. He said the company has enough cash and earnings to increase its dividend.
Raymond James analyst Chris Cox said in a research note that the lubricants business generated US$150 million in earnings before taxes for Suncor and, based on those numbers, Suncor got fair value for the sale.
Cox noted the main asset in Suncor’s lubricants business was a large manufacturing facility in Mississauga, Ont. The entire lubricants business employed 700 people, and Suncor spokesperson Sneh Seetal said those employees will join HollyFrontier.