Cenovus buys ConocoPhillips assets for $17.7-billion

Cenovus buys ConocoPhillips assets for $17.7-billion

JEFF LEWIS

The Globe and Mail

Published Wednesday, Mar. 29, 2017 4:35PM EDT

Last updated Wednesday, Mar. 29, 2017 4:57PM EDT

 

Cenovus Energy Inc. is paying $17.7-billion in cash and shares for oil sands and other assets owned by ConocoPhillips Co. in the second major consolidation in the oil patch this month.

Calgary-based Cenovus said late on Wednesday it is acquiring the 50 per cent of the companies’ oil sands joint venture that it does not already own. That includes interests in the steam-driven Foster Creek and Christina Lake projects. The deal also includes assets in the Deep Basin region of Alberta and British Columbia.

Cenovus said it would issue $3-billion in shares in a bought deal led by Royal Bank of Canada and JP Morgan. It has also arranged $10.5-billion in bridge financing. The company is said it would raise cash by jettisoning production  of 47,600 barrels of oil equivalent per day.

“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,” Cenovus chief executive officer Brian Ferguson said in a statement.

“The acquisition is accretive and significantly increases Cenovus’s growth potential. Going forward, we plan to focus capital spending on these two value platforms.”

Cenovus and others are bulking up in a bid to gain heft and lower costs amid expectations that crude prices will stay subdued for longer than previously thought.

The deal marks the second exit so far this year by a major energy company following Royal Dutch Shell’s sale of most of its oil sands holdings to Canadian Natural Resources Ltd. earlier this month.

Under the deal, Cenovus said its total production would double to 588,000 barrels of oil equivalent per day.

ConocoPhillips chairman and chief executive officer Ryan Lance said, “This transaction will make an immediate and significant impact on the company’s value proposition by allowing us to rapidly reduce debt to $20-billion and double our share repurchase authorization to $6-billion. This means we will not only accelerate, but exceed, the three-year plan we laid out in November 2016.”

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on March 29, 2017, in economic impact, oil. Bookmark the permalink. Leave a comment.

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