Cenovus selling stake in Sask. project
CALGARY Cenovus Energy Inc. says it is selling its majority stake in a Saskatchewan enhanced-oil recovery project to Calgary-based Whitecap Resources Inc. for $940 million.
The deal is the last on a list of four asset sales the major oilsands producer vowed to complete to help pay for its $17.7-billion acquisition of most of the Canadian assets of Houston-based ConocoPhillips earlier this year.
It has previously agreed to sell its Palliser assets in southeastern Alberta to Torxen Energy and Schlumberger for $1.3 billion, its Suffield operations in southern Alberta to International Petroleum Corporation for $512 million and its Pelican Lake heavy oil assets in northern Alberta for $975 million to Canadian Natural Resources.
Incoming Cenovus CEO Alex Pourbaix said the sale will allow the Calgary company to retire the entire $3.6-billion bridge facility associated with the ConocoPhillips purchase before year-end.
“We’re pleased with the progress we’ve made in delivering on our divestiture plan to optimize our portfolio and deleverage the company’s balance sheet,” Pourbaix said in a statement.
Cenovus has said it will identify other assets for sale this year to take the total raised to between $4 billion and $5 billion.
The company said it is focused on using cash flow from its operations and asset sale proceeds to reach a target of being below two times net debt to adjusted earnings before interest, taxes, depreciation and amortization.
In a separate release, Whitecap says the purchase of Cenovus’s 62-per-cent interest in the Weyburn, Sask., project will boost its overall production in 2018 by about 25 per cent to about 74,000 barrels of oil equivalent per day.
The Weyburn project has been in operation since 1954. Cenovus began injecting carbon dioxide into its oil-producing underground formations in 2000 to enhance oil production and extend the life of the field.
It “is one of the largest carbon capture, utilization and storage projects in the world,” the company said. “It is recognized globally as one of the most successful developments of its kind from a technical, economic and environmental perspective.”
It noted there has been minimal development of this asset over the past few years. It added it expects to spend about $60 million on the development in 2018.