Cenovus reaches agreement to sell interest in Weyburn asset for $940 million
November 13 2017 - 4:38PM
Cenovus Energy Inc. (TSX:CVE) (NYSE:CVE) has entered into an
agreement to sell its majority interest in the Weyburn
carbon-dioxide enhanced oil recovery operation in Saskatchewan for
cash proceeds of $940 million. The sale is expected to close in the
fourth quarter of 2017, subject to customary closing conditions.
The previously announced sale of Cenovus’s Pelican Lake assets
closed on September 29, 2017 and the company still anticipates the
previously announced sales of its Palliser and Suffield assets to
close later this year.
“We’re pleased with the progress we’ve made in delivering on our
divestiture plan to optimize our portfolio and deleverage the
company’s balance sheet,” said Alex Pourbaix, Cenovus President
& Chief Executive Officer. “Net proceeds from the Weyburn asset
sale, combined with the other three divestitures announced earlier
this fall, will position us to retire the entire $3.6 billion
bridge facility associated with the ConocoPhillips asset purchase
by the end of 2017.”
The company is focused on using cash flow from its operations
and asset sale proceeds to achieve its target of being below two
times net debt to adjusted earnings before interest, taxes,
depreciation and amortization (EBITDA).
TD Securities Inc. acted as exclusive financial advisor to
Cenovus on the Weyburn transaction.
Transaction summary |
Gross
proceeds ($ million) 1 |
940 |
Current
production (BOE/d) 2 |
~11,500 |
Liquids
(%) |
100 |
Year-to-date operating margin ($ millions) 1,3 |
106 |
Price per
flowing barrel ($ per BOE/d) 1 |
81,700 |
1 All dollar amounts are in Canadian currency unless otherwise
specified. 2 Current production above reflects Cenovus’s production
net of third party burdens other than Crown royalties. Gross
production includes production associated with a net profits
interest and Gross Overriding Royalties held by third parties and
is 14,800 BOE/d. 3 Year-to-date as of September 30, 2017.
Operating margin is an additional subtotal. For more information,
refer to the Non-GAAP Measures and Additional Subtotal section of
the Advisory below.
ADVISORY Oil and Gas
Information Barrels of Oil Equivalent – Natural gas
volumes have been converted to barrels of oil equivalent (BOE) on
the basis of six thousand cubic feet (Mcf) to one barrel (bbl). BOE
may be misleading, particularly if used in isolation. A conversion
ratio of one bbl to six Mcf is based on an energy equivalency
conversion method primarily applicable at the burner tip and does
not represent value equivalency at the wellhead. Given that the
value ratio based on the current price of crude oil compared with
natural gas is significantly different from the energy equivalency
conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is
not an accurate reflection of value.
Non-GAAP Measures and Additional Subtotal This
release contains references to net debt to adjusted EBITDA, which
is a non-GAAP measure and operating margin, which is an additional
subtotal found in Note 1 of the Interim Consolidated Financial
Statements (unaudited) for the period ended September 30, 2017.
These measures do not have a standardized meaning as prescribed by
International Financial Reporting Standards (IFRS). Readers should
not consider these measures in isolation or as a substitute for
analysis of the company's results as reported under IFRS. These
measures are defined differently by different companies and
therefore are not comparable to similar measures presented by other
issuers. For definitions and more information on these and other
non-GAAP measures and additional subtotals, refer to "Non-GAAP
Measures and Additional Subtotals" in the Advisory section of
Cenovus's Third Quarter Report for the period ended September 30,
2017 ("Third Quarter Report") (available on SEDAR at sedar.com, on
EDGAR at sec.gov and Cenovus's website at cenovus.com).
Forward-Looking InformationThis news release
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 our current expectations,
estimates and projections about the future, based on certain
assumptions made by us in light of our experience and perception 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. Readers are cautioned not to place undue reliance on
forward-looking information as actual results may differ materially
from those expressed or implied. Cenovus undertakes no obligation
to update or revise any forward-looking information except as
required by law.
Forward-looking information in this news release is identified
by words such as "expect", "focus", "plan", “position”,
"will" or similar expressions and includes suggestions of future
outcomes, including statements about: expected timeline for closing
of the transaction; the company's divestiture plan and anticipated
outcomes, including expected timelines and milestones; expected
impacts of the Weyburn transaction to Cenovus; expected use of
proceeds from the Weyburn and other asset sales transactions,
including expected timelines and milestones for retirement of the
bridge facility; expected timing of closing the Palliser and
Suffield asset sales; the company's target net debt to adjusted
EBITDA and focus on using cash flow from its operations and asset
sale proceeds to achieve such target.
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. Material factors or
assumptions on which the forward-looking information in this news
release is based include: assumptions disclosed in Cenovus's
current guidance, available at cenovus.com; successful closing of
the Weyburn and other asset sales transactions, including obtaining
necessary regulatory and partner approvals and satisfaction of all
other conditions to closing and within expected timelines;
application of asset sale proceeds against outstanding debt in the
manner as intended; and other risks and uncertainties described
from time to time in the filings Cenovus makes with securities
regulatory authorities. Additional information about the material
risk factors that could cause Cenovus's actual results to differ
materially from those expressed or implied by its forward-looking
statements is contained under “Risk Factors” in Cenovus's Annual
Information Form (AIF) or Form 40-F for the period ended December
31, 2016 and in the updates in the "Risk Management" section of
Cenovus’s Management’s Discussion and Analysis in Cenovus's Third
Quarter Report.
Cenovus Energy Inc.Cenovus Energy Inc. is a
Canadian integrated oil company. It is committed to applying fresh,
progressive thinking to safely and responsibly unlock energy
resources the world needs. Operations include oil sands projects in
northern Alberta, which use specialized methods to drill and pump
the oil to the surface, and established natural gas and oil
production in Alberta, British Columbia and Saskatchewan. The
company also has 50% ownership in two U.S. refineries. Cenovus
shares trade under the symbol CVE, and are listed on the Toronto
and New York stock exchanges. For more information, visit
cenovus.com.
Find Cenovus on Facebook, Twitter, LinkedIn, YouTube and
Instagram.
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/d81b80a0-d409-4309-af41-d4142e76c78c
CENOVUS
CONTACTS:Investor RelationsKam
SandharVice-President, Investor Relations &Corporate
Development403-766-5883 Steven MurrayManager,
Investor
Relations403-766-3382 |
MediaSonja FranklinSenior Media
Advisor403-766-7264 Media Relations general
line403-766-7751 |
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