Cenovus acquiring outstanding 50% interest in Sunrise oil sands asset
June 13 2022 - 6:00AM
Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has reached an agreement
to purchase the remaining 50% of the Sunrise oil sands project in
northern Alberta from bp. Total consideration for the transaction
includes $600 million in cash, a variable payment with a maximum
cumulative value of $600 million expiring after two years, and
Cenovus’s 35% position in the undeveloped Bay du Nord project
offshore Newfoundland and Labrador. The transaction has an
effective date of May 1, 2022 and is anticipated to close in the
third quarter of this year, subject to closing conditions and
normal purchase price adjustments.
Full ownership of Sunrise further enhances Cenovus’s core
strength in the oil sands. Sunrise has been operated by the company
since the beginning of 2021, following the Husky Energy
transaction, and Cenovus is now in the early stages of applying its
oil sands operating model at this asset.
“Acquiring the remaining working interest in Sunrise enables us
to fully benefit from the significant optimization opportunities
available,” said Alex Pourbaix, Cenovus President & Chief
Executive Officer. “By applying Cenovus’s advanced operating
techniques, we expect to increase production at Sunrise while
driving down sustaining capital, operating costs and emissions
intensity.”
Cenovus currently operates Sunrise and owns 50% of the asset
through the Sunrise Oil Sands Partnership, with bp. Current
production from the asset is approximately 50,000 barrels per day
(bbls/d), and the company expects to achieve nameplate capacity of
60,000 bbls/d through a multi-year development program. The
acquisition is expected to be immediately accretive to adjusted
funds flow and cash from operating activities.
2022 Guidance
Cenovus’s corporate guidance dated April 26, 2022 does not
reflect this acquisition. The company plans to update guidance with
its second quarter results in July 2022.
Advisory Forward-looking
Information This document contains certain forward-looking
statements and forward-looking information (collectively referred
to as “forward-looking information”) within the meaning of
applicable securities legislation, including the United States
Private Securities Litigation Reform Act of 1995, about Cenovus’s
current expectations, estimates and projections about the future,
based on certain assumptions made in light of experiences and
perceptions of historical trends. Although Cenovus believes that
the expectations represented by such forward-looking information
are reasonable, there can be no assurance that such expectations
will prove to be correct.
Forward-looking information in this document is identified by
words such as “anticipated”, “expect”, “opportunities”, “will” or
similar expressions and includes suggestions of future outcomes,
including, but not limited to, statements about: timing in respect
of closing the transaction; production (including achieving
nameplate capacity), sustaining capital costs, operating cost,
emissions intensity and optimization at the Sunrise facility; the
accretive effect of the acquisition of Sunrise on Cenovus’s
adjusted funds flow and cash from operating activities.
Developing forward-looking information involves reliance on a
number of assumptions and consideration of certain risks and
uncertainties, some of which are specific to Cenovus and others
that apply to the industry generally. The factors or assumptions on
which the forward-looking information in this news release are
based include, but are not limited to: closing the transaction in a
timely manner; Cenovus’s success applying advanced operating
techniques at Sunrise; Cenovus’s ability to realize accretions to
adjusted funds flow and cash from operating activities as a result
of the acquisition of Sunrise.
Except as required by applicable securities laws, Cenovus
disclaims any intention or obligation to publicly update or revise
any forward-looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned that
the foregoing lists are not exhaustive and are made as at the date
hereof. Events or circumstances could cause actual results to
differ materially from those estimated or projected and expressed
in, or implied by, the forward-looking information. For additional
information regarding Cenovus’s material risk factors, the
assumptions made, and risks and uncertainties which could cause
actual results to differ from the anticipated results, refer to
“Risk Management and Risk Factors” and “Advisory” in Cenovus’s
Management’s Discussion and Analysis for the periods ending
December 31, 2021 and March 31, 2022, and to the risk factors,
assumptions and uncertainties described in other documents Cenovus
files from time to time with securities regulatory authorities in
Canada (available on SEDAR at sedar.com, on EDGAR at sec.gov and
Cenovus’s website at cenovus.com).
Cenovus Energy Inc.
Cenovus Energy Inc. is an integrated energy company with oil and
natural gas production operations in Canada and the Asia Pacific
region, and upgrading, refining and marketing operations in Canada
and the United States. The company is focused on managing its
assets in a safe, innovative and cost-efficient manner, integrating
environmental, social and governance considerations into its
business plans. Cenovus common shares and warrants are listed on
the Toronto and New York stock exchanges, and the company’s
preferred shares are listed on the Toronto Stock Exchange. For more
information, visit cenovus.com.
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