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Cenovus offered Pelican Lake operations to Canadian Natural for $975M

  • September 05, 2017

Investors and analysts offering totalled regard Tuesday as Cenovus Energy delivered a initial of 4 pivotal item sales it has betrothed to assistance compensate for a $17.7-billion squeeze of many of a Canadian resources of ConocoPhillips.

The Calgary-based oilsands association announced it is offered a Pelican Lake complicated oil operations in northern Alberta for $975 million in money to cross-town opposition Canadian Natural Resources. The understanding is approaching to tighten by a finish of September.

Cenovus has been in a doghouse with investors given Mar 29 when it announced a merger of oilsands and required resources from Houston-based ConocoPhillips, along with a devise to lift $3 billion by arising new shares and a selling of a Pelican Lake and southern Alberta Suffield operations.

Its shares, that had depressed roughly 43 per cent by final Friday, were adult about 3 per cent Tuesday morning.

“This represents a poignant initial step in a plan to optimize a item portfolio and deleverage a change piece as designed following a merger of a ConocoPhillips assets,” pronounced Cenovus CEO Brian Ferguson in a statement.

He combined a association is saying “strong interest” from intensity buyers for a other assets. In June, a sales list was stretched to embody a Palliser operations in southern Alberta and Weyburn oil resources in Saskatchewan.

Neither Ferguson nor Canadian Natural CEO Steve Laut were accessible for an interview.

In June, a association announced a astonishing retirement of Ferguson as of Oct. 31 and a launch of a hunt for a successor, moves related by analysts to a market’s dislike for a ConocoPhillips deal.

Step towards ‘restoring marketplace confidence’

Analysts pronounced a Pelican Lake cost of about $50,000 per daily tub of prolongation matched their expectations.

“(Cenovus) gets credit for removing a initial of 4 targeted deals opposite a line,” pronounced Menno Hulshof of TD Securities in a report, adding a proclamation is “a step in a right instruction in restoring marketplace confidence.”

Pelican Lake is producing about 19,600 barrels per day of complicated oil. The 3 other packages Cenovus is perplexing to sell furnish a homogeneous of about 85,000 barrels of oil per day.

In a note, researcher Travis Wood of National Bank Financial estimated Cenovus could lift $2.8 billion from a 3 other packages.

The association has indicated it competence also sell other “non-core” assets. It pronounced a Pelican Lake supports would be used to compensate down a $3.6-billion overpass loan trickery used in a ConocoPhillips deal.

Analyst Nick Lupick of AltaCorp Capital pronounced Tuesday’s squeeze will boost Canadian Natural’s Pelican Lake oil prolongation to about 66,500 barrels per day and includes Cenovus’s 38 per cent seductiveness in a Pelican Lake sales pipeline, creation Canadian Natural a solitary owner.

The prolongation further is not deliberate element for Canadian Natural.

It reported achieving outlay of some-more than one million barrels homogeneous per day in Jun after it sealed a $12.74-billion squeeze of Alberta oilsands resources from Royal Dutch Shell and Houston-based Marathon Oil.

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