Cenovus announces Atlantic assets restructuring plan
September 08 2021 - 5:16PM
Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has entered into
agreements with its partners in the Atlantic region to restructure
its working interests in the Terra Nova and White Rose projects,
providing improved economics for the company’s regional portfolio.
These agreements will increase Cenovus’s working interest in
Terra Nova and, if a decision is taken to restart West White Rose,
reduce the company’s working interest in the White Rose field.
Cenovus’s working interest in Terra Nova will be 34%, up from
13%. The company will receive $78 million from the exiting partners
as a contribution towards future Terra Nova asset retirement
obligations. The Terra Nova asset life extension project will
proceed, extending the life of the field to 2033. Production is
expected to resume before the end of 2022, with gross production
expected to reach approximately 29,000 barrels per day in
2023. Including funding from the Government of Newfoundland and
Labrador, the net to Cenovus outlay to restart Terra Nova is
expected to be approximately $60 million to first oil.
“Sanctioning the Terra Nova asset life extension provides a
superior value proposition for our shareholders compared with the
alternative of abandoning and decommissioning the project,” said
Alex Pourbaix, Cenovus President & Chief Executive Officer.
“While we are still evaluating whether to proceed with West White
Rose, the capital risk in our portfolio will be reduced if we
decide to move forward.”
Cenovus and Suncor, as part of the restructuring, have entered
into an agreement whereby Cenovus will decrease its working
interest in the White Rose field and satellite extensions while
Suncor will take a larger stake, contingent upon approval of the
West White Rose project restarting. Cenovus would reduce its stake
in the original field to 60% from 72.5% and to 56.375% from 68.875%
in the satellite extensions. Cenovus and its partners continue to
evaluate their options on the West White Rose Project, with a
decision to be made by mid-2022.
Cenovus continues to progress swiftly towards its $10 billion
net debt target, which it expects to achieve later this year. At
that point the company expects to begin allocating some of its free
funds flow toward enhancing shareholder returns.
Advisory Presentation Basis
Production volumes are presented on a before royalties basis,
unless otherwise stated.
Non-GAAP Measures and Additional SubtotalsThis
presentation contains references to net debt, which is a non-GAAP
measure. This measure does not have a standardized meaning as
prescribed by IFRS. Readers should not consider this measure in
isolation or as a substitute for analysis of the company’s results
as reported under IFRS. This measure is defined differently by
different companies and therefore is not comparable to similar
measures presented by other issuers. For definitions, as well as
reconciliations to GAAP measures, and more information on this and
other non-GAAP measures and additional subtotals, refer to
“Non-GAAP Measures and Additional Subtotals” on page 1 of Cenovus’s
Management’s Discussion and Analysis (MD&A) for the period
ended June 30, 2021 (available on SEDAR at sedar.com, on EDGAR at
sec.gov and Cenovus’s website at cenovus.com.)
Forward-looking Information This 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 we believe 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 news release is identified
by words such as “achieve”, “contingent”, “continue”, “expected”,
“forward”, “future”, “plan", “progress”, “target”, “will”, and
similar expressions, and includes suggestions of future outcomes,
including, but not limited to, statements about: general and 2021
priorities; Cenovus’s increased working interest in Terra Nova; the
amount to be received from the exiting partners as a contribution
towards future Terra Nova asset retirement obligations; the
extension of the life of the Terra Nova field; the expectation that
production from Terra Nova will resume before the end of 2022;
expected production from Terra Nova in 2023; the expected net to
Cenovus outlay to restart Terra Nova to first oil; the reduction to
the capital risk in our portfolio if we proceed with West White
Rose; plans to decrease our working interest in White Rose
contingent upon approval of the restart of West White Rose;
expected timing of the decision to restart West White Rose; our $10
billion net debt target and expected timing to achieve it; and
plans to consider opportunities for incremental shareholder returns
and investment in the business.
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 is based include, but are not
limited to: our ability to achieve net debt of $10 billion by the
end of 2021; approval of the West White Rose project restart; our
ability to access sufficient capital and insurance coverage to
pursue development plans; and the assumptions inherent in our 2021
guidance available on cenovus.com.
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
MD&A for the period ended June 30, 2021 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).
Additional information concerning Husky’s business and assets as of
December 31, 2020 may be found in Husky’s MD&A and Annual
Information Form, each of which is filed and available on SEDAR
under Cenovus’s profile at sedar.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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