Cenovus considering sale of some Deep Basin, non-producing oilsands assets

Cenovus hosted an analyst call with CEO Brian Ferguson on April 21, summarized by GMP FirstEnergy in a research note issued Monday.

The target is to have substantially all asset sales announced, if not completed, by year-end, although Cenovus is aware that it could take longer, GMP FirstEnergy said.

Cenovus announced along with the ConocoPhillips asset deal—where it will become sole owner of the Foster Creek, Christina Lake and proposed Narrows Lake SAGD projects—that it has put up for sale its conventional operations at Suffield in southern Alberta as well as its Pelican enhanced heavy oil recovery project in northern Alberta.

The scope of the asset divestment program is actually bigger, GMP FirstEnergy notes.

“Mr. Ferguson confirmed that Cenovus would be looking at opportunities to divest not only its legacy conventional assets, but potentially Deep Basin assets as well. Ferguson noted that CEOs of several companies with assets in the Deep Basin have contacted him recently, and acknowledged the potential to monetize some of the Deep Basin infrastructure as well,” analysts wrote.

While Cenovus may be considering selling off certain Deep Basin assets, the company is also accelerating development spending, stating that ConocoPhillips “starved” the region in favour of investing in other global plays.

And while Cenovus is a dominating oilsands player, it may be divesting there as well.

“Mr. Ferguson also noted the potential to sell non-producing assets. Recall that we have previously speculated that Cenovus may have been looking to divest either of its Telephone Lake or Steepbank/East McMurray undeveloped in situ oilsands assets east of Fort McMurray, and we believe Imperial/Exxon would be an interested bidder.”

Cenovus has not considered selling its downstream assets, GMP FirstEnergy says, nor is it considering royalty-interest deals on its oilsands assets.

source: JWN

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