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Cenovus to divest stake in Weyburn oil project to Whitecap for $940m

EBR Staff Writer Published 14 November 2017

Cenovus Energy has reached a deal to divest its stake of 62.1% in the Weyburn oil project in the Canadian province of Saskatchewan to Calgary-based Whitecap Resources for a sum of $940m.

The Weyburn project is a carbon-dioxide enhanced oil recovery operation, which according to Whitecap has a high operating netback of $31.86/boe.

As part of the transaction, Whitecap will add 14,600boe/d from the Weyburn unit along with 200boe/d of production from minor light oil assets in southeast Saskatchewan.

Whitecap, in a statement, said: “The Acquisition is a continuation of Whitecap's strategy to enhance our existing portfolio with assets that exhibit lower production declines, high operating netbacks and significant growth opportunities with strong capital efficiencies to further enhance our future free funds flow.

“The Unit is a self-sustaining operation that generates strong free funds flow even in a low commodity price environment and requires minimal capital investment to maintain production volumes and associated funds flow.”

For Cenovus, the transaction is part of its divesture plans. It also marks the last asset to be sold out of the four assets it had put up for sale for the current year.

Apart from Weyburn operation, Cenovus had planned to divest the Palliser assets, Suffield operations and the Pelican Lake oil assets.

In late September, the Pelican Lake assets located in northern Alberta were sold by Cenovus to Canadian Natural Resources in a deal worth $975m.

Cenovus had also previously agreed on a $1.3bn deal for its Alberta-located Palliser assets with Torxen Energy and Schlumberger and a $512m deal for its Suffield assets in the same region with International Petroleum Corporation. Both the deals are anticipated to be closed in Q4 2017, subject to meeting of customary conditions.

Cenovus president & CEO Alex Pourbaix said: “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.

“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.”