ConocoPhillips said this week it completed the $13.3 billion sale to partner Cenovus of its 50% non-operated interest in the Foster Creek Christina Lake oil sands partnership and the majority of its western Canada Deep Basin gas assets.
The Houston-based independent exploration-production giant retains its operated 50% interest in the Surmont oil sands joint venture and its operated 100% Blueberry-Montney unconventional acreage position.
“This transactionc will make a significant and immediate impact by accelerating our value proposition,” said Ryan Lance, chairman and CEO. “We will achieve a step-function improvement in our balance sheet strength and the pace of our planned share repurchase program. Our focus on free cash flow generation and our clear allocation priorities put us in a strong position to deliver double-digit returns to shareholders through price cycles.”
The company has revised its second-quarter production guidance to 1.37 to 1.41 million barrels of oil-equivalent per day (MMBOE/d), reflecting the partial quarter impact of the sale.
Calgary-based Cenovus will double its reserves and production by buying the ConocoPhillips assets. Combined, the holdings can produce 298,000 barrels of oil-equivalent a day (BOE/d) in 2017, Kallanish Energy reports.
The deal allows Cenovus “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,” said Brian Ferguson, Cenovus CEO when the deal was announced March 30.
With about 440,000 BPD after the acquisitions, Cenovus will be the third largest oil-sands producer by the end of the decade, behind Suncor Energy and Canadian Natural, according to company statements
At the deal closing, Cenovus issued 208 million common shares to ConocoPhillips as partial payment for the acquisition and ConocoPhillips now owns roughly 16.9% of the issued and outstanding Cenovus common shares.