Conoco Agrees $13.3bn Sale to Cenovus

US major ConocoPhillips said March 29 it had reached a definitive deal to sell US$13.3bn of assets to Canadian independent Cenovus Energy.

The deal covers Conoco’s 50% 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. Estimated 2017 full year production from the assets to be sold in Alberta and British Columbia is 280,000 barrels of oil equivalent/day net, of which two-thirds liquids and one-third gas. Cenovus put the figure slightly higher, at 298,000 boe/d.

The transaction is made up of $10.6bn cash, and 208mn Cenovus shares valued at $2.7bn as of March 28.

Conoco said the deal will reduce its net debt to $20bn and double its share buyback to $6bn; it said the disposed assets had a net book value of roughly $10.9bn as at December 31, 2016.

Cenovus said the C$17.7bn acquisition “would double its production and reserves in Canada”, establish its anchor position in two of Canada’s most attractive oil and gas plays, is fully financed and would be “immediately accretive.”

Conoco will retain operated stakes in the Surmont oil sands joint venture (50%) and Blueberry-Montney unconventional acreage (100%).

Shell earlier this month announced a similar US$7.25bn divestment of western Canada oil sands assets to Canadian Natural Resources. Last October Shell divested assets in the same region to another Canadian independent Tourmaline Oil Corp for just over US$1bn.

Mark Smedley