Cenovus buys ConocoPhillips Western Canada deep basin gas assets

ConocoPhillips assets

Cenovus issued 208 million common shares to ConocoPhillip

ConocoPhillips announced a transaction with Cenovus to sell its 50 per cent non-operated interest in the Foster Creek Christina Lake oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets, according to a press release.

“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,” said Cenovus CEO Brian Ferguson.

“As a result of this transaction, we’ve now doubled our production and reserves base.”

Cenvous says it is “deleveraging” its balance sheet, which includes selling the Pelican Lake and Suffield assets, which are currently being marketed.

ConocoPhillips Canada retains its operated 50 per cent interest in the Surmont oil sands joint venture and its operated 100 per cent Blueberry-Montney unconventional acreage position.

“This transaction will make a significant and immediate impact by accelerating our value proposition,” said Ryan Lance, ConocoPhillips CEO.

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The company has revised its second-quarter production guidance to 1,365 to 1,405 thousand boe/d, reflecting the partial quarter impact of this disposition.

“We will achieve a step-function improvement in our balance sheet strength and the pace of our planned share repurchase program. Our focus on free cash flow generation and our clear allocation priorities put us in a strong position to deliver double-digit returns to shareholders through price cycles,” said Lance.

Acquisition of Cenovus Common Shares

At closing, Cenovus issued 208 million common shares to ConocoPhillips as partial consideration for the disposition of the assets and ConocoPhillips now owns approximately 16.9 per cent of the issued and outstanding Cenovus common shares.

Prior to the transaction, neither ConocoPhillips nor its affiliates owned any Cenovus common shares.

Depending on market conditions and regulatory requirements, ConocoPhillips may from time to time decrease its beneficial ownership, or decrease its control or direction over any of Cenovus’s securities through market transactions, private agreements or otherwise.