By September 6, 2017 Read More →

Cenovus sells Pelican Lake oil sands assets to CNRL for nearly $1 billion

pelican lake

Canadian Natural Resources Pelican Lake facility

Cenovus also selling Palliser assets in southern Alberta

Calgary-based oil sands giants Cenovus Energy Inc. and Canadian Natural resources entered into an agreement for Cenovus to sell its Pelican Lake heavy oil operations as well as other assets in northern Alberta, for $975 million.

The properties have combined production of 19,600 BOE/d with the sale expected to close on Sept. 30.

Canadian Natural Resources is already active in Pelican Lake, which is a large, shallow crude oil pool in Northern Alberta with an estimated 4.1 billion barrels of oil.

Proceeds from the sale will be applied against the $3.6 billion debt taken on to help fund Cenovus’s acquisition of oil sands assets from ConocoPhillips earlier this year.

“With the completion of this transformational deal, we now have full control of our best-in-class oil sands projects and an exciting new growth platform in the Deep Basin that provides us with significant short-cycle development opportunities to complement our long-term oil sands growth portfolio,” Cenovus CEO Brian Ferguson said after the agreement was announced in May.

The company said at the time of the purchase that it would divest non-core assets to help pay down the extra debt.

pelican lake

“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,” said Ferguson.

The company also has set up “data rooms” for its Palliser assets in southern Alberta as well as its Weyburn carbon-dioxide enhanced oil recovery operation in Saskatchewan where prospective buyers can examine confidential company data about the assets.

“The divestiture processes for the remainder of our legacy conventional assets are proceeding as expected, with strong interest from potential buyers,” said Ferguson.

Cenovus stock was trading at $10.25 a share Wednesday morning, up from a low of $9.25 two weeks ago, but down from a high of $21.26 in late 2016.

Posted in: Canada

Comments are closed.