Calgary, Weyburn, Midale – On June 20, Cenovus Energy Inc., operator of the Weyburn Unit, announced it is selling its interest in that unique oilfield, in addition to several other properties so that it can fund its purchase of assets from ConocoPhillips. Three weeks earlier, on June 1, Apache Canada announced it had sold its Midale Unit to Cardinal Energy Ltd., along with other assets, for $330 million
The Weyburn Unit was part of the assets hived off from EnCana when the parent company split into EnCana and Cenovus in 2009. At the time, EnCana became largely a natural gas company, and Cenovus focused on oil.
The Midale Unit was purchased by Apache in 1999 from Shell. Apache implemented its CO2 flood in 2005, after a pilot project that first started in 1984 and demonstration project that began in 1999.
When reached for comment, Apache spokesperson Castlen Kennedy emailed, “Apache can confirm it has agreed to sell its assets at House Mountain and Midale to Calgary-based Cardinal Energy Ltd. The sale of these assets is in line with Apache’s efforts to further streamline its portfolio and focus on our high-growth areas of opportunity, particularly in the Permian Basin. Apache sincerely appreciates the efforts of Apache employees who helped manage and operate these assets over the years. Their commitment to safety and operational excellence established a strong track record for the assets, setting them up for success under the new owner.”
During its investor day Cenovus put forward a five-year plan that the company expects will generate 14 per cent annualized free funds flow growth through 2021 at a West Texas Intermediate (WTI) price of US$55 per barrel while increasing production at a 6 per cent compound annual growth rate and reducing its debt. Cenovus is progressing its plan to divest non-core assets and is targeting between $4 billion and $5 billion in announced sales agreements by the end of the year, which is expected to more than satisfy the $3.6 billion asset sale bridge facility used to help fund the acquisition from ConocoPhillips. The company is now targeting to reach divestiture agreements by the end of 2017 for its entire legacy conventional portfolio. The divestiture processes for the Pelican Lake and Suffield assets are already well underway, and the company is now in the process of preparing data rooms for its Palliser asset in southern Alberta and its Weyburn CO2 enhanced oil operation in southern Saskatchewan. Combined, all of these assets are expected to produce approximately 112,000 boepd in 2017.
“We’ve had significant interest in our assets by a variety of potential purchasers and we’re confident we can achieve our divestiture target,” said Brian Ferguson, Cenovus president and CEO. “Reducing our debt position is our number one priority and we remain committed to strengthening our balance sheet and maintaining investment grade credit ratings. By taking these actions, we believe we’re poised to deliver significant value to shareholders over the coming years.”
Ferguson, who has been president and CEO since Cenovus’ inception, also announced his retirement Oct. 31, 2017.
