Cenovus in $500MM+ Deal
Cenovus Energy Inc. (TSX, NYSE: CVE) has announced that it has reached agreements to sell its Husky retail fuels network and the Wembley assets in its conventional business for combined total cash proceeds of nearly $517 million (CAD 660 million).
The deals allow the company to further focus its portfolio, accelerate deleveraging and support increasing shareholder returns, Cenovus outlined. Under the agreements, Cenovus will sell 337 gas stations in its Husky retail fuels network to Parkland Corporation and Federated Co-operatives Limited for total cash proceeds of $329.4 million ($420 million), Cenovus highlighted, adding that it will retain its commercial fuels business. The conventional segment deal will see the company sell its Montney assets in Wembley for cash proceeds of approximately $186.7 million ($238 million). Total production from this asset averaged approximately 3,200 barrels of oil equivalent per day in 2021, according to Cenovus.
The fuels network transaction is expected to close in mid-2022 and is subject to approval under the Competition Act (Canada) and other customary closing conditions. The Wembley assets transaction is expected to close in December 2021, subject to customary closing conditions.
“This is another demonstration of Cenovus delivering on opportunities to continue to optimize our portfolio and unlock value from assets that will not attract significant investment in our business,” Alex Pourbaix, Cenovus’ president and chief executive officer, said in a company statement.
“With these latest transactions, we now expect to realize more than CAD 1.1 billion ($863 million) of total proceeds from sales announced in 2021,” Pourbaix added in the statement.
Cenovus announced in January that it had closed its strategic combination with Husky Energy Inc. The company noted at the time that the transaction created a resilient integrated energy leader that is well positioned to provide superior returns for investors over the long term, as well as strong environmental, social and governance performance. The combined business is the third largest Canadian oil and natural gas producer and the second largest Canadian-based refiner and upgrader, according to Cenovus’ website.
In October last year, Cenovus and Husky revealed that they had entered into a definitive arrangement agreement under which Cenovus and Husky would combine in an all-stock transaction valued at $18.5 billion (CAD 23.6 billion), inclusive of debt.
Cenovus describes itself as an integrated energy company with oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States.
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