Cenovus Energy sale a step toward cutting debt burden

CALGARY — Investors and analysts offered measured praise Tuesday as Cenovus Energy delivered the first of four key asset sales it has promised to help pay for its $17.7-billion purchase of most of the Canadian assets of ConocoPhillips.

The Calgary-based oilsands company announced it is selling its Pelican Lake heavy oil operations in northern Alberta for $975 million in cash to crosstown rival Canadian Natural Resources. The deal is expected to close by the end of September.

Cenovus has been in the doghouse with investors since March 29, when it announced the acquisition of oilsands and conventional assets from Houston-based ConocoPhillips, along with a plan to raise $3 billion by issuing new shares and the marketing of its Pelican Lake and southern Alberta Suffield operations.

Its shares, which had fallen almost 43 per cent by last Friday, were up about three per cent Tuesday morning.

“This represents a significant first step in our strategy to optimize our asset portfolio and deleverage our balance sheet as planned following the acquisition of the ConocoPhillips assets,” Cenovus CEO Brian Ferguson said in a statement.

He added the company is seeing “strong interest” from potential buyers for its other assets. In June, the sales list was expanded to include its Palliser operations in southern Alberta and Weyburn oil assets in Saskatchewan.

Neither Ferguson nor Canadian Natural CEO Steve Laut were available for an interview.

In June, the company announced the unexpected retirement of Ferguson as of Oct. 31.