Cenovus Energy to buy ConocoPhillips’s oil and gas assets in Canada for $13.3bn


Oil and gas industry news : Canadian oil company, Cenovus Energy has agreed to acquire CAD 17.7 billion (USD 13.3 billion) worth stakes in American global energy firm ConocoPhillips’s Canadian oil and gas assets.

As per the agreement terms, ConocoPhillips’ subsidiary, ConocoPhillips Canada will sell a non-operated stake of 50% in the Foster Creek Christina Lake (FCCL) oil sands partnership along with a majority stake in its western Canada Deep Basin gas assets to Cenovus Energy.

ConocoPhillips Canada, though will hold on to a stake of 50% as well as ownership in the joint venture relating to the Surmont oil sands apart from the 100% interest in the Blueberry-Montney unconventional acreage position.

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ConocoPhillips Chairman and Chief Executive Officer Ryan Lance commented: “The transaction is accretive to our cash margins and lowers the average cost of supply of our portfolio, with no impact to our estimate of cash provided by operating activities at $50 per barrel Brent price. We will retain upside to future oil price increases through our equity stake in Cenovus and an uncapped, five-year contingent payment.

“ConocoPhillips Canada will now focus exclusively on our Surmont oil sands and the liquids-rich Blueberry-Montney unconventional asset. Cenovus will assume sole ownership of FCCL and assume operations in the Deep Basin assets. This is truly a transformational event for both companies.”

Foster Creek oil sands project

Foster Creek oil sands project. Photo courtesy of Cenovus Energy Inc.

The sale proceeds will be utilized by the US energy company, ConocoPhillips in bringing down its debt to USD 20 billion in the current year and also to increase share repurchases.

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The US energy company headquartered in Houston, Texas also intends to increase its planned share buybacks three times to USD 3 billion from USD 1 billion in the present year.

On the other hand, the Canadian oil company, Cenovus Energy through the acquisition of the assets will get a combined daily production capacity from them of nearly 298,000 barrels of oil equivalent in the current year.

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Brian Ferguson, President and CEO, Cenovus Energy, commented: “This transformational acquisition allows us to take full control of our best-in-class oil sands projects and to add a second growth platform across the prolific Deep Basin that provides complementary short-cycle development opportunities.”

“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.”

Subject to customary conditions including mandatory regulatory approvals, the transaction between the companies is expected to be wrapped up in the second quarter of this year.

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