Cenovus Energy to dispose Pipestone Business for $474.9m

Canadian integrated oil and natural gas company Cenovus Energy has reached an agreement to sell Pipestone and Wembley natural gas and liquids business in Alberta for C$625m ($474.9m).

The deal also covers the sale of the Pipestone Business’s 39% interest in the Wembley gas plant.

Though Cenovus didn’t identify the buyer, media reports suggest that the company is selling these assets to Canadian oil and natural gas company NuVista Energy.

Cenovus Energy president CEO Alex Pourbaix said: “I’m pleased with this important step towards streamlining and rationalising our acreage in the Deep Basin.

“These are high-quality assets and we believe the Pipestone transaction will provide compelling value for Cenovus shareholders.”

According to the company, average year-to-date production of the Pipestone Business is approximately 8,800boe/d, including 55% of natural gas. Price per flowing barrel of the project is $71,000.

Subject to customary closing conditions, the deal is scheduled to close in the third quarter of 2018.

Cenovus is also currently evaluating and marketing other non-core Deep Basin assets in a move to divest them as it sees a high level of interest in these processes.

The company noted that it will not sell any asset until it receives ‘fair value’ for its shareholders.

Canada-based investment bank TD Securities served as the exclusive financial adviser to Cenovus on this transaction.

Cenovus Energy currently operates oil sands projects in northern Alberta as well as established natural gas and oil production in Alberta and British Columbia. It also owns a 50% ownership in two US refineries.