Cenovus pays off $940 million debt with Weyburn enhanced oil recovery sale

Whitecap Resources buys Weyburn EOR assets

Acquisition includes a 62.1% interest in Weyburn(14,600 boe/d) and 200 boe/d of production from other assets

Cenovus Energy Inc. agreed to sell its majority interest in the Weyburn carbon-dioxide enhanced oil recovery operation in Saskatchewan for cash proceeds of $940 million to Whitecap Resources, according to a press release.

“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,” said Alex Pourbaix, Cenovus president and CEO.

The previously announced sale of Cenovus’s Pelican Lake assets closed on Sept. 29 and the company still anticipates the previously announced sales of its Palliser and Suffield assets to close later this year.

“Net proceeds from the Weyburn asset sale, combined with the other three divestitures announced earlier this fall, will position us to retire the entire $3.6 billion bridge facility associated with the oil sands ConocoPhillips asset purchase by the end of 2017,” said Pourbaix.

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The acquisition includes a 62.1 per cent operated working interest in the Weyburn Unit (14,600 boe/d) and 200 boe/d of production from minor assets in southeast Saskatchewan.

The Weyburn Unit is a world class carbon dioxide enhanced oil recovery development with a low base decline rate of less than 5 per cent, high operating netback of $31.86/boe, and significant short and long term development and expansion opportunities, according to Cenovus.

The assets also include extensive infrastructure in place to facilitate future development plans.

Whitecap anticipates spending approximately $60 million in 2018 on the Unit, which represents 35% of anticipated net operating income from the Assets, to maintain a flat and stable production profile.

The Weyburn assets is anticipated to be a multi-decade source of self-funding growth and annual free funds flow with meaningful near and long term growth opportunities, according to the press release.

There are significant optimization and expansion opportunities within the unit including:

• 34 waterflood and EOR area infill drills;
• Reservoir optimization of the mature EOR patterns to minimize decline and improve CO₂ utilization;
• 8 identified and planned CO₂ expansion phases which include the drilling of 93 (57.8 net) production and 62 (38.5 net) injection wells; and
• Recovery of hydrocarbons liquids from recycled CO₂ stream prior to reservoir reinjection.