Cenovus Energy has signed an agreement to divest its Tucker thermal asset to an undisclosed firm for $625m (C$800m) in cash.

The Canadian firm plans to use the proceeds to further accelerate its net debt reduction plan, and improve its capacity to increase shareholders’ returns.

The Tucker oil sands project is estimated to contain 1.27 billion barrels of original bitumen. It is expected to recover approximately 350 million barrels over its 35 years of operational life.

In 2022, the Tucker project is expected to reach a daily average production of 18,000 barrels to 21,000 barrels.

The transaction is subject to customary closing conditions. It is likely to be closed in late January 2022.

Cenovus said it will realise nearly $1.56bn (C$2bn) in total proceeds from its assets sales this year, including this latest deal.

Cenovus Energy president and CEO Alex Pourbaix said: “This is yet another example of Cenovus seizing opportunities to generate incremental value for shareholders.

“With Tucker and the other divestitures announced this year, we have delivered on our asset sales commitment for 2021, positioning the company well to focus on higher-return opportunities in the portfolio and continue increasing returns to shareholders.”

The Canadian firm said the Tucker is one of the four oil sands projects it operates in Alberta. The other three include Foster Creek, Christina Lake, and Sunrise.

In November, Cenovus agreed to divest its retail fuels network and the Wembley assets in its conventional business in separate deals, worth approximately C$660m ($515.6m) in total.

In January this year, Cenovus announced the completion of its merger with the Canadian company Husky.