Cenovus Agrees to Sell Pipestone Business for $625M

Canadian integrated oil and natural gas company Cenovus Energy Inc., and one of its subsidiaries, have entered into an agreement to sell the general partnership that holds the Pipestone and Wembley natural gas and liquids business in northwestern Alberta for cash proceeds of $625 million.

The transaction also includes the Pipestone business’ 39 percent operated working interest in the Wembley gas plant. The sale is expected to close in the third quarter, subject to customary closing conditions.

Proceeds from the sale will be used to “further deleverage the company’s balance sheet,” according to a statement published on Cenovus’ website.

This statement also revealed that Cenovus “is in various stages of evaluating and marketing other non-core Deep Basin assets for potential divestment”.

Commenting on the deal, Alex Pourbaix, Cenovus president and CEO, said, “I’m pleased with this important step towards streamlining and rationalizing our acreage in the Deep Basin”.

“These are high quality assets and we believe the Pipestone transaction will provide compelling value for Cenovus shareholders,” he added.

In the second quarter of 2018, Cenovus recorded cash from operating activities of $533 million, compared with $1.2 billion in the same period a year earlier. The company generated adjusted funds flow of $774 million during the quarter, which was slightly higher than the second quarter of 2017.

Oil sands production for Cenovus rose to almost 390,000 barrels per day in the second quarter, 49 percent higher than the same period of 2017.

Cenovus began independent operations on December 1, 2009. Although independent operations began in the previous decade, Cenovus can trace its roots back to the 1880s.