ConocoPhillips Announces Sale of Foster Creek Christina Lake Partnership Interest and Western Canada Deep Basin Gas Assets to Cenovus for $13.3 Billion; Significant Transaction Accelerates Value Proposition
March 29th, 2017
ConocoPhillips (NYSE: COP) today announced it has signed a definitive agreement with Cenovus (TSX: CVE) (NYSE: CVE) to sell its 50 percent non-operated interest in the Foster Creek & Christina Lake (FCCL) oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets, for total proceeds of $13.3 billion. ConocoPhillips Canada will retain its operated 50 percent interest in the Surmont oil sands joint venture and its operated 100 percent Blueberry-Montney unconventional acreage position.
Total proceeds for the transaction are $13.3 billion before customary adjustments, consisting of the following considerations:$10.6 billion of cash, payable at closing; and
208 million Cenovus shares, valued at $2.7 billion on March 28, 2017.
In addition, the company will receive five years of uncapped contingent payments, triggered when Western Canada Select (WCS) crude prices exceed $52 Canadian dollars per barrel. Using March 28, 2017 foreign exchange and differentials, WCS of CA$52 per barrel would equate to WTI of approximately $52 per barrel.
“This is a significant, win-win opportunity for ConocoPhillips and Cenovus,” said ConocoPhillips Chairman and Chief Executive Officer Ryan Lance. “This transaction will make an immediate and significant impact on the company’s value proposition by allowing us to rapidly reduce debt to $20 billion and double our share repurchase authorization to $6 billion. This means we will not only accelerate, but exceed, the three-year plan we laid out in November 2016. The transaction is accretive to our cash margins and lowers the average cost of supply of our portfolio, with no impact to our estimate of cash provided by operating activities at $50 per barrel Brent price. We will retain upside to future oil price increases through our equity stake in Cenovus and an uncapped, five-year contingent payment. ConocoPhillips Canada will now focus exclusively on our Surmont oil sands and the liquids-rich Blueberry-Montney unconventional asset. Cenovus will assume sole ownership of FCCL and assume operations in the Deep Basin assets. This is truly a transformational event for both companies.”
ConocoPhillips (NYSE: COP) today announced it has signed a definitive agreement with Cenovus (TSX: CVE) (NYSE: CVE) to sell its 50 percent non-operated interest in the Foster Creek & Christina Lake (FCCL) oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets, for total proceeds of $13.3 billion. ConocoPhillips Canada will retain its operated 50 percent interest in the Surmont oil sands joint venture and its operated 100 percent Blueberry-Montney unconventional acreage position.
Total proceeds for the transaction are $13.3 billion before customary adjustments, consisting of the following considerations:$10.6 billion of cash, payable at closing; and
208 million Cenovus shares, valued at $2.7 billion on March 28, 2017.
In addition, the company will receive five years of uncapped contingent payments, triggered when Western Canada Select (WCS) crude prices exceed $52 Canadian dollars per barrel. Using March 28, 2017 foreign exchange and differentials, WCS of CA$52 per barrel would equate to WTI of approximately $52 per barrel.
“This is a significant, win-win opportunity for ConocoPhillips and Cenovus,” said ConocoPhillips Chairman and Chief Executive Officer Ryan Lance. “This transaction will make an immediate and significant impact on the company’s value proposition by allowing us to rapidly reduce debt to $20 billion and double our share repurchase authorization to $6 billion. This means we will not only accelerate, but exceed, the three-year plan we laid out in November 2016. The transaction is accretive to our cash margins and lowers the average cost of supply of our portfolio, with no impact to our estimate of cash provided by operating activities at $50 per barrel Brent price. We will retain upside to future oil price increases through our equity stake in Cenovus and an uncapped, five-year contingent payment. ConocoPhillips Canada will now focus exclusively on our Surmont oil sands and the liquids-rich Blueberry-Montney unconventional asset. Cenovus will assume sole ownership of FCCL and assume operations in the Deep Basin assets. This is truly a transformational event for both companies.”
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