The deal’s total consideration includes a $466.9m (C$600m) cash payment and a conditional payment with a $466.9m (C$600m) maximum aggregate value that expires after a two-year period.
As part of the deal, Cenovus will sell its 35% stake in the undeveloped Bay du Nord project offshore Newfoundland and Labrador, in Eastern Canada, to BP.
The Bay du Nord project comprises several oil discoveries in the Flemish Pass basin, located approximately 500km north-east of St John’s.
Situated in water depths of approximately 1,200m, the project is estimated to hold recoverable reserves of nearly 300 million barrels of oil.
BP Gulf of Mexico & Canada senior vice-president Starlee Sykes said: “This is an important step in our plans to create a more focused, resilient, and competitive business in Canada.
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“Bay du Nord will add sizeable acreage and a discovered resource to our existing portfolio offshore Newfoundland and Labrador. Along with BP’s active Canadian marketing and trading business, this will position BP Canada for strong future growth.”
With the sale, BP will have no interests in the oil sands production assets in the North American country.
Following the completion of the transaction, BP will focus on the future growth of offshore production. The firm currently owns stakes in six exploration licences in the offshore Eastern Newfoundland region.
The transaction is subject to regulatory approvals and is scheduled to close this year.
Cenovus president and CEO Alex Pourbaix said: “Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimisation opportunities available.
“By applying Cenovus’s advanced operating techniques, we expect to increase production at Sunrise while driving down sustaining capital, operating costs, and emissions intensity.”
The Sunrise oil sands project is currently operated by Cenovus with a 50% stake, while BP holds the remaining stake.
The project’s current production stands at approximately 50,000 barrels per day (bbls/d).
Following a thorough multi-year development programme, the project is expected to achieve a nameplate capacity of 60,000bpd.
Earlier this year, BP announced that it had partnered with ADNOC and Masdar for its planned hydrogen projects in Teesside, UK.