Cenovus Weighs $2 Billion Asset Sale to Rein In Debt After Major Merger

Canada’s Cenovus is considering a divestment from conventional oil and gas assets that could be worth over $2 billion, Reuters has reported, citing unnamed sources.

The assets are in Alberta, and the proceeds from the potential sales would be used to reduce the company’s debt load that swelled after its takeover of sector player MEG Energy, the Reuters sources said. They noted, however, that while Cenovus has reached out to potential buyers, there is no guarantee a deal will be reached. Cenovus may ultimately decide to keep the conventional assets, they told the publication.

The takeover of MEG Energy was approved in November last year after months of negotiations and after Cenovus raised the offer price twice to get MEG Energy on board with the sale. Initially valued at $5.7 billion, the acquisition ended up costing Cenovus $6.2 billion in cash and stock.

The merger will create one of North America’s largest integrated oil producers, expanding Cenovus’ heavy oil footprint in the Christina Lake region and tightening its grip on the Canadian oil sands, which are core assets for the company.

Meanwhile, Cenovus said at the end of last year it planned to hike oil and gas production in 2026 by around 4%, eyeing a daily average of between 945,000 barrels of oil equivalent and 985,000 barrels of oil equivalent. Most of this would come from the oil sands, at an average of 755,000-780,000 barrels of oil equivalent. To reach that goal, Cenovus will be investing heavily in its oil sands operations, with much less of its capex going into conventional oil and gas.

“Following the completion of a three-year growth investment cycle, we are well positioned to ramp up volumes from our projects at Foster Creek and West White Rose and advance the in-flight expansion at our newly acquired Christina Lake North assets,” Cenovus president and CEO Jon McKenzie said at the time.

By Irina Slav for Oilprice.com

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