Houston-based ConocoPhillips Co. plans to sell its 10% stake in Canadian oil company Cenovus Energy Inc.
ConocoPhillips repurchased its shares of Cenovus in 2017 in a $ 17.7 billion transaction in which Cenovus secured a 50% interest in Conoco’s Foster Creek and Christina Lake oil sands projects. Conoco acquired 208 million shares of Cenovus as part of the transaction, as well as $ 14.1 billion in cash.
The sale gave Cenovus full control of the steam bitumen assets in what was, at the time, the largest transaction in the oil sands in Alberta. The acquisition immediately doubled Cenovus’ total production to 588,000 barrels of oil per day.
It also made Conoco the biggest investor in the Calgary-based company, although the US oil giant has always said it will not hold Cenovus shares for the long term.
Ryan Lance, president and CEO of Conoco, told an investor call on Tuesday that the company intends to sell its Cenovus shares on the open market starting in the second quarter of 2021. He plans to complete the sale by the fourth quarter of 2022, with proceeds used to increase share buybacks.
Cenovus did not immediately return a request for comment on Tuesday.
Conoco’s stake in Cenovus would be worth around $ 2 billion, based on Monday’s close. Sales rumors have been spinning since 2018.
At the time, people familiar with the plan told Reuters that the US energy company had been in discussions with investment banks about appointing advisers for the sale. However, they cautioned that the exact time would depend on market conditions.
Mr. Lance said in a press release Tuesday that, overall, the first quarter of fiscal year 2021-2022 “has been a momentous moment” for Conoco.
In particular, he highlighted the conclusion of a US $ 9.7 billion stock deal to buy rival US shale oil producer Concho Resources Inc. – one of many steps towards consolidating the northern energy sector. -american in 2020 due to lower fuel levels. price and demand.
Cenovus also took part in the action. Days after Conoco announced its purchase of Concho in October, Cenovus announced it would acquire Husky Energy Inc. in a $ 3.8 billion transaction that created the fourth largest energy company in the world. Canada.
Alex Pourbaix, CEO of Cenovus, said at the time that he and his Husky counterpart, Rob Peabody, had discussed the company merger on several occasions in recent years. Discussions turned serious this summer, after the coronavirus wreaked havoc on energy demand.
Along with the divestment from Cenovus, Conoco on Tuesday reported first-quarter earnings that beat Wall Street expectations, as a return in vaccine-related travel demand and a winter storm that swept through parts of the United States. in February pushed up oil and gas prices.
Higher fuel prices generated operating cash flow of US $ 2.1 billion, despite an impact of US $ 1 billion due to the removal of hedges and restructuring charges related to the operation. acquisition of Concho by the company.
Conoco said it sold its oil and gas at an average price of US $ 45.36 per barrel in the quarter, 17% more than the previous year. However, production was down 4 percent from a year ago due to the effects of the February storm.
The company also presented a plan to reduce its gross debt by US $ 5 billion over the next five years.
With a report from Reuters
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