Strathcona to sell Montney assets while buying Hardisty rail terminal

Canada’s Strathcona Resources announced on May 15 that it had agreed to sell its assets in the Montney shale play in three separate transactions worth a combined CAD2.84bn ($2.03bn).

In the largest of these transactions, Strathcona is selling its Kakwa assets to ARC Resources for roughly CAD1.67bn ($1.21bn) in total value, comprising CAD1.65bn ($1.18bn) in cash and roughly CAD45mn ($32.2mn) in assumed lease obligations. Meanwhile, Strathcona is selling its Grande Prairie assets for around CAD850mn ($608mn) in total value, comprising CAD750mn ($537mn) in cash and roughly CAD100mn ($71.6mn) in assumed lease obligations. And lastly, the company has agreed to sell its Groundbirch assets to Tourmaline Oil for CAD291.5mn ($208.6mn) in common shares of Tourmaline.

The company added that it had also signed another definitive agreement to the Hardisty rail terminal for around CAD45mn ($32mn) in cash and ($32mn) in cash in the first quarter of 2025 and had already closed that acquisition early in the second quarter.

The Hardisty terminal acquisition represents a continuation of Strathcona’s “countercyclical acquisition strategy focused on core area consolidation”, the company said. It noted that while utilisation rates at the terminal are at only 19% today, they had been up to 82% historically, during “periods of tight pipeline egress”. Strathcona believes that this provides it with a natural hedge against future bottlenecks.

Hardisty is the largest crude-by-rail terminal in Western Canada, with capacity of 262,000 barrels per day and year-to-date throughput of about 50,000 bpd, Strathcona said. It noted that the terminal is directly connected to the Hardisty diluent recovery unit, which separates diluent from raw bitumen prior to rail transportation, “allowing for a competitive netback for upstream producers versus pipeline alternatives”.

The terminal was previously owned by USD Partners.

Strathcona said that together with its Hamlin terminal, its rail terminal capacity now services around 80% of total current crude-by-rail volumes in Western Canada, “allowing for meaningful economies of scale”.

The company anticipates that its Groundbirch sale will close in the second quarter of the year, with the Kakwa and Grande Prairie sales following in the third quarter.

Following the closing of the Montney sales, Strathcona will be a pure-play heavy oil company producing around 120,000 bpd, with 95,000 bpd of it thermal and 25,000 bpd conventional.

The company said it had revised its guidance for 2025 upward by around 5,000 bpd to 150,000-160,000 barrels of oil equivalent per day (boepd) on average, normalised for the Montney asset sales. The increase has been attributed to outperformance at the company’s Cold Lake operations.

Strathcona now estimates its capital expenditures for 2025 at CAD1.2bn ($859mn), down from CAD1.35bn ($966bn) previously. It said that this reflected the removal of Montney capital from the second half of the year.