Cenovus Energy has agreed to divest its Palliser crude oil and natural gas assets situated in south-eastern Alberta, Canada, to Torxen Energy and Schlumberger in a deal valued at C$1.3bn ($1.04bn).
The Palliser Block, which borders the acreage awarded to the Schlumberger Production Management (SPM) and Torxen joint venture established earlier this year, has current production of about 54,000 barrels of oil equivalent a day.
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It comprises oil and gas wells, surface facilities, a pipeline network, and approximately 800,000 acres of oil and gas development rights. As part of the development strategy, more than 1,600 oil wells will be drilled from next year.
Cenovus Energy intends to apply all proceeds received from the Palliser sale and the recently announced Suffield asset sale against the outstanding balance of the company’s $3.6bn ($2.88bn) bridge facility.
Last month, the company sold its Pelican Lake assets and used the net proceeds from this divestment to retire the first tranche of its asset-sale bridge facility and to pay down a portion of the second tranche.
Cenovus Energy president and CEO Brian Ferguson said: “Our strategy to optimise our portfolio by selling non-core assets and using the proceeds to pay down debt is firmly on track.
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By GlobalData“We continue to target between C$4bn ($3.2bn) and C$5bn ($4bn) in announced asset sale agreements by the end of the year, and we remain committed to returning to our long-term debt ratio target.”
Subject to customary closing conditions, the transaction is expected to close this quarter.
The company also noted that its Weyburn carbon-dioxide enhanced oil recovery operation in Saskatchewan, Canada, is proceeding according to expectations, for which it is expected to enter a sale agreement this quarter.
Cenovus is currently evaluating the divestment potentiality of its other non-core assets.
