Driller buys huge acreage off Cenovus

A huge block of oil and gas leases in southern Alberta have been bought by one of the world’s largest oilfield servicing companies.

Schlumberger and Torxen Energy — a firm led by former Cenovus executives — has bought the Palliser crude oil and natural gas assets from Cenovus Energy Inc. for C$1.3 billion, it was announced Thursday.

The cash sale is expected to close in the fourth quarter, subject to customary conditions.

Schlumberger would become the majority, non-operating owner of the fields that currently produces 54,000 barrels of oil equivelent per day at sites between Brooks, Drumheller and central Alberta.

It also earns rights to “exclusive service provision” in the field that measures 800,000 acres of oil and gas leases.

A multi-year drilling program for the assests was briefly outlined on Thursday showing 1,600 wells would be drilled, the first of which are slated for 2018.

Schlumberger VP Patrick Schorn, said his company is happy to partner with Torxen in the Palliser Block.

“By leveraging our reservoir knowledge, oilfield services technology and project management expertise, we expect to lower development costs and maximize the value of this asset in a market where our traditional business model is challenged to deliver the required financial returns.”

Schlemberger closed most of its Medicine Hat operations several years ago. It maintains a small base in Brooks, Aridrie and Calgary in southern Alberta.

For Cenovus it is the latest in a string of assets the Calgary-based oilsands company has sold to reduce its $3.6 billion asset-sale bridge facility.

On Sept. 25, Cenovus agreed to sell its Suffield crude oil and natural gas operations in southern Alberta to International Petroleum Corporation for $512 million in cash.

The company earlier announced the sale of its Pelican Lake heavy oil operations in northern Alberta for $975 million in cash to cross-town rival Canadian Natural Resources.

In late March Cenovus announced the $17.7 billion acquisition of most of the Canadian assets of Houston-based ConocoPhillips, along with a plan to raise $3 billion by issuing new shares and the marketing of its Pelican Lake and Suffield operations.

“Our strategy to optimize our portfolio by selling non-core assets and using the proceeds to pay down debt is firmly on track,” said Cenovus president and CEO Brian Ferguson.

“We continue to target between $4 billion and $5 billion in announced asset sale agreements by the end of the year, and we remain committed to returning to our long-term debt ratio target.”