ConocoPhillips has announced that it has sold its Foster Creek Christina Lake partnership nterest and western Canada Deep Basin gas assets to Cenovus for $13.3 billion.
The agreement will see Cenovus buy ConocoPhillips 50 per cent nonoperated interest in the Foster Creek Christina Lake (FCCL) oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets. The transaction will see the exchange of $10.6 billion of cash, payable at closing; and 208 million Cenovus shares, valued at $2.7 billion on March 28, 2017.
ConocoPhillips Canada will retain its operated 50 percent interest in the Surmont oil sands joint venture and its operated 100 percent Blueberry-Montney unconventional acreage position.
The transaction is subject to specific conditions precedent being satisfied, including regulatory review and approval.
“This is a significant, win-win opportunity for ConocoPhillips and Cenovus. ConocoPhillips Canada will now focus exclusively on our Surmont oil sands and the liquids-rich Blueberry-Montney unconventional asset. Cenovus will assume sole ownership of FCCL and assume operations in the Deep Basin assets. This is truly a transformational event for both companies,” said ConocoPhillips chairman and chief executive Officer Ryan Lance.
The company intends to use the cash portion of the transaction proceeds to reduce debt to $20 billion in 2017 and increase the level and pace of share repurchases.
The full-year 2017 estimated production associated with the assets being sold is 280 thousand barrels of oil equivalent per day net after royalty (NAR), comprised of approximately two-thirds liquids and one-third gas.
“We laid out a bold and unique value proposition in late 2016 that was focused on free cash flow generation, a strong balance sheet, returning cash to shareholders, disciplined growth and improved returns,” added Lance.