Albertans may be happy to hear Cenovus Energy may save us, at a whopping price of C$17.7B. Cenovus Energy announced on Wednesday that it plans to buy most of the assets of the Texas based company ConocoPhillips. This marks the exit of an international player from the oils land but word is the deal is a win-win. CEO of Cenovus Energy Brain Ferguson says that the deal is a ‘transformational acquisition’ and will benefit the economy that is right now suffering through low oil prices.
The deal includes a 50% FCCL Partnership interest for ConocoPhillips. This gives the company a part in an agreement in the venture between companies based in Northern Alberta and Cenovus Energy gets access to the convention Deep Basin assets of ConocoPhillips in British Columbia and Alberta. The assets combined promises production of 298,000 oil barrels per day and in this year.
The deal includes 208 million common shares of Cenovus Energy and $14.1 billion cash. According to Cenovus Energy, the deal and plans are in place, all they need to do now is raise $3 billion for the acquisition to go smoothly.
According to Ferguson, the deal will give them a competitive edge that will double the company’s scale. The deal also includes additional payments that will be made by Cenovus Energy to ConocoPhillips. However, this depends on Western Canadian Select’s average daily price if it rises to C$52 per barrel. According to the government of Alberta, last month, this price was C$39.14 per barrel.
Cenovus Energy has also put its Alberta conventional oil assets at Suffield and Pelican Lake up for sale. They are further planning to sell their non-core conventional assets.
The money Cenovus Energy is expected to raise will be applied against any bridge loans the company is holding. As for ConocoPhillips, its CEO Ryan Lance said that the deal will help them clear their debt.
This deal comes right after a deal was struck between Canadian Natural Resources and Marathon Oil, including Royal Dutch Shell where Canadian Natural Resources bought both the companies at $12.74 billion earlier this month.