Cenovus to double production and reserves in Canada

$17.7 billion acquisition establishes anchor position in two of Canada’s most attractive oil and gas plays

Cenovus Energy Inc. has agreed to acquire ConocoPhillips’ 50 per cent interest in the FCCL Partnership, the companies’ jointly owned oil sands venture operated by Cenovus. Cenovus is also purchasing the majority of ConocoPhillips’ Deep Basin conventional assets in Alberta and British Columbia. Combined, these assets have forecast 2017 production of approximately 298,000 barrels of oil equivalent per day (BOE/d). The acquisition is immediately accretive to key metrics, and, assuming the successful completion of a planned divestiture program, is expected to result in an 18per cent increase in 2018 adjusted funds flow per share compared with Cenovus’s original 2018 forecast. Total consideration for the purchase is $17.7 billion, including $14.1 billion in cash and 208 million Cenovus common shares. The cash component is fully financed with a portion of cash on hand, existing credit facility capacity and committed bridge loans. As part of the transaction, Cenovus has also agreed, in certain circumstances, to make contingent payments to ConocoPhillips. The transaction is expected to close in the second quarter of 2017, subject to customary conditions, including the receipt of necessary regulatory approvals, and has an effective date of January 1, 2017. Concurrent with the acquisition, Cenovus has launched a bought-deal offering of common shares for expected gross proceeds of approximately $3 billion. The bought-deal offering is detailed in a separate news release issued by Cenovus today (March 29).

“This transformational acquisition allows us to take full control of our best-inclass oil sands projects and to add a second growth platform across the prolific Deep Basin that provides complementary short-cycle development opportunities,” said Brian Ferguson, Cenovus President & Chief Executive Officer. “The acquisition is accretive and significantly increases Cenovus’s growth potential. Going forward, we plan to focus capital spending on these two value platforms. At the same time, we intend to divest a significant portion of our legacy conventional assets to help fund the transaction.”Cenovus Energy Inc.

Christina Lake oil sands facility Photo coutesty of Cenovus Energy Inc. Located about 120 kilometres south of Fort McMurray, our Christina Lake project uses steam-assisted gravity drainage (SAGD) to drill wells, inject steam at a low-pressure and pump oil to the surface.