Osum Oil Sands Corp, a private energy company chaired by former Suncor Energy Inc Chief Executive Rick George, agreed on Tuesday to buy Shell Canada's Orion oil sands project for C$325 million ($298.11 million).
The Orion project in the Cold Lake region of northern Alberta is close to a number of other oil sands developments and has been producing bitumen since 2007 using steam-assisted extraction methods.
In the first quarter of 2014 average production was 6,700 barrels per day from 22 well pairs, and the project is expected to be economically viable for more than 25 years.
Osum also owns the nearby Taiga Project, which has secured regulatory approval to build and operate a 35,000-barrel-per-day facility.
"The Orion Project is a first-class operation that will provide Osum with significant current production and cash flow," said Osum President and Chief Executive Officer Steve Spence.
"In the longer term, we believe that by linking Orion together with our nearby Taiga Project, Osum has a unique opportunity to build a significant production platform in the Cold Lake region."
Osum was set up in 2005 and is focused on "in-situ" thermal recovery techniques where steam is pumped into the ground to liquefy the tar-like bitumen trapped in the oil sands so it can be pumped to the surface.
Chairman Rick George was chief executive of Suncor, Canada's largest oil and gas company, for 21 years until his retirement from the company in 2012.
The Orion transaction is expected to close on or around July 31. Osum has obtained financing commitments from Barclays Bank and Goldman Sachs Lending Partners for US$225 million. The balance of the purchase will be funded by cash.
(Reporting by Nia Williams; Editing by Jonathan Oatis)
($1 = 1.0902 Canadian Dollars)