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A pump jack sits abandoned an hour south of Calgary.Chris Bolin/The Globe and Mail

Norway's Statoil ASA is selling its oil sands business to Athabasca Oil Corp. for up to $832-million in cash and shares, marking the exit of one of two major European oil companies that had once championed the northern Alberta resource.

Statoil, which entered the oil sands business nearly a decade ago, said the sale gives it immediate cash that it can redeploy elsewhere in its global businesses, which have changed since the company started its Alberta operations.

Athabasca will acquire the Leismer steam-driven project, which produces 24,000 barrels a day, as well as an undeveloped lease called Corner. It is snapping up the assets for $24,000 per daily barrel of production, which is well below the cost of developing a new project. The operations, located south of Fort McMurray, Alta., employ 220 people.

The deal marks a big retreat from the oil sands, which in the last decade had been the target of a massive spending boom among European and Asian companies. Since then, development and operating costs jumped and planned export pipelines for the oil faced years-long delays. Meanwhile, the shale oil revolution unlocked massive reserves in locations such as North Dakota and Texas, which can be developed more quickly and cheaply.

"Since we entered the oil sands in 2007, our portfolio has changed and also the energy markets have shifted quite fundamentally since then," said Paul Fulton, Statoil's country president. "We've seen a decline in the oil price, and Statoil has a broader portfolio of assets that it needs to allocate its capital to."

The price of the deal is made up of $435-million in cash, 100 million Athabasca shares and a series of contingent value payments. Statoil will book an impairment of $500-million to $550-million, it said.

Statoil had been a demonstrator of the Alberta oil sands to European officials and media, and defended the operation amid protests among environmentalists who highlighted its high carbon emissions at annual meetings in Oslo. Indeed, Greenpeace celebrated Statoil's exit.

"The environment and Statoil's shareholders are both winners here, as any serious attempt to meet the Paris climate commitments will turn this kind of high carbon oil into a stranded asset," said Keith Stewart, head of Greenpeace Canada's energy campaign.

Another European oil company, France's Total SA, has scaled back its ambitions in the oil sands as costs have climbed, having shelved a major project called Joslyn and sold some of its interest in the $13.5-billion Fort Hills project, which is under construction.

With the transaction, Statoil will become an investor in Athabasca, with just less than 20 per cent ownership. Athabasca may also make a series of contingent value payments through 2020. The annual payment will be calculated as a percentage of Leismer production and require a West Texas intermediate oil price higher than $65 (U.S.) per barrel. The contingent value payment may amount to nothing if crude prices stay lower, but will be capped at $75-million (Canadian) annually.

Previously, 2016 was a year of sales for Athabasca. In January, Athabasca sold interests in its Alberta shale oil and gas assets to Murphy Oil Corp. for $250-million. Later in the year it announced it was selling a royalty interest in its bitumen assets to a holding company to increase its financial flexibility in a period of lower oil prices.

In its third quarter update in November, it said ramp-up to 12,000 barrels per day at its Hangingstone oil sands project wouldn't come until 2018, instead of the previously announced late 2016.

On Wednesday, Robert Broen, Athabasca's chief executive officer, said the deal is "transformational for Athabasca and establishes scale with top tier thermal assets and people."

Mr. Fulton said he expects a majority of the oil sands employees will be taken on by Athabasca.

The Norwegian company and Thailand's state-owned PTTEP once operated these leases and others as a joint venture, but they broke up the partnership in 2014, and split up the assets. A few months later, Statoil halted plans to develop Corner, whose cost was estimated at as much as $2-billion.

Statoil plans to hold on to its Canadian East Coast offshore assets, which include a major oil discovery in what is known as the Flemish Pass.

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