ConocoPhilips to sell oil, Canadian natural gas assets to Cenovus for $13.3 bn

30 Mar 2017

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US energy giant ConocoPhilips yesterday struck a deal to sell its oil sands and western Canadian natural gas assets to Cenovus Energy Inc for C$17.7 billion ($13.3 billion), the largest divestment in its history.

ConocoPhillips will sell its 50-per cent non-operated interest in the Foster Creek Christina Lake oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets.
 
The Texas-based company will retain its operated 50-per cent interest in the Surmont oil sands joint venture and its wholly-owned Blueberry-Montney unconventional acreage position.

Calgary-based Cenovus, one of Canada's largest oil company will pay $10.6 billion in cash, and 208 million or 20 per cent of its shares, valued at $2.7 billion.

The deal will make Cenovus into the third-largest oilsands producer, behind Canadian Natural Resources and Suncor Energy.

ConocoPhillips plans to use the cash portion of the transaction to reduce debt to $20 billion in 2017 and increase the level and pace of share repurchases.

The ConocoPhillips board of directors approved an increase in the existing share repurchase to $6 billion, which is double the previous $3 billion authorisation.

The company also intends to triple its planned 2017 buybacks from $1 billion to $3 billion, with the remaining $3 billion allocated to 2018 and 2019.

''This is a significant, win-win opportunity for ConocoPhillips and Cenovus,'' said ConocoPhillips chairman and CEO, Ryan Lance.

''This transaction will make an immediate and significant impact on the company's value proposition by allowing us to rapidly reduce debt to $20 billion and double our share repurchase authorisation to $6 billion,'' he added.

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