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Canada's Cenovus Energy to divest Palliser oil and gas assets for $1.3 billion

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Staff Writer | October 20, 2017
Cenovus Energy has entered into an agreement to sell its Palliser crude oil and natural gas assets in southeastern Alberta to Torxen Energy and Schlumberger for cash proceeds of $1.3 billion.
Cenovus Energy
Acquisition   Divestiture agreements
The sale is expected to close in the fourth quarter of this year, subject to customary closing conditions.

As with other recently announced divestiture agreements, proceeds from the Palliser sale will be used to deleverage the company’s balance sheet.

Net proceeds from the sale of Cenovus’s Pelican Lake assets, which closed on September 29, 2017, have been used to retire the first tranche of the company’s $3.6 billion asset-sale bridge facility and to pay down a portion of the second tranche.

Net proceeds from the Palliser sale and the recently announced Suffield asset sale, which is also expected to close in the fourth quarter of 2017, will be applied against the outstanding balance of the bridge facility.

Cenovus is focused on using cash flow from its operations and asset sale proceeds to achieve its target of being below two times net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).

The sale process for Cenovus’s Weyburn carbon-dioxide enhanced oil recovery operation in Saskatchewan is proceeding as expected.

Cenovus anticipates reaching a sale agreement for the Weyburn asset in the fourth quarter of 2017.

In addition, Cenovus has certain other non-core assets that are currently being evaluated for potential sale.