ConocoPhillips Acquired by Canadian company, Cenovus Energy

ConocoPhillips will be acquired by Cenovus Energy according to CEO Brian Feguson of Cenovus. The Canadian company based in the city of Calgary will taking $17.7B out of its pocket to buy the American-based company.

This acquisition—like every one that take place—is to fortify the footing of Cenovus; it is a strategic step towards to owning oilsands assets as stated by CEO Ferguson:

“Consolidating our ownership at Foster Creek, Christina Lake and Narrows Lake has consistently ranked as our best strategic opportunity to increase leverage to a portfolio of top-tier oilsands assets”.

In addition to buying the most of the ConocoPhillips’ shares, Cenovus will also own 50% interest in the FCCL Partnership. The FCCL Partnership is an oilsands venture between two companies in the northern part of the Canadian province of Alberta; and most of ConocoPhillips’ Deep Bain conventional assets in this province and in the B.C.

Therefore, almost 300,000 barrels of oil are expected to be produced on a daily basis. There is $14.1B in cash, plus 208M Cenovus common shares.

In addition to the acquisition, Cenovus signed a contract stating that more money will be paid to ConocoPhillips once the average daily price of Western Canadian Select goes up above $52/barrel. The lifespan of the contract is 5 years.

As of now, the average of Canadian Western Select is at $39.14/barrel. This is a great according to the CEO of ConocoPhillips, Ryan Lance, because it decrease most of the company’s debt:

“ConocoPhillips Canada will now focus exclusively on our Surmont oilsands and the liquids-rich Blueberry-Montney unconventional asset”.

Cenovus will be bringing out an additional $3B for the acquisition in addition to selling its assets at Pelican Lake and Suffield in the province of Alberta. It will most probably sell more assets. 

Cenovus shares went up by nine cents now at $17.45 on the Toronto Stock Exchange.