TORONTO: Canadian oil and gas producer Cenovus Energy Inc (CVE.TO) has hired investment banks to sell the Weyburn and Palliser oil assets, which it hopes would fetch as much as C$2.5 billion ($2 billion), according to people familiar with the situation. The moves are part of a push to sell assets to pay down debt Cenovus took to help fund the C$16.8 billion purchase of oil and gas businesses from ConocoPhillips (COP.N). Cenovus is working with Toronto-Dominion Bank (TD.TO) to sell Weyburn, and with Credit Suisse (CSGN.S) and Scotiabank (BNS.TO) to sell the Palliser assets, two people said this week, declining to be named as the appointments are not public. The company last month identified Weyburn and Palliser as additional assets it would look to sell and raised its total divestiture target to C$4 billion to C$5 billion, from C$3.6 billion earlier.
Cenovus expects to generate as much as C$1.5 billion for Weyburn and about C$1 billion for Palliser, the people said. The deals could be announced in the fourth quarter, the company has said. If successful, these divestitures could help Cenovus reach up to half of its asset sales targets. Cenovus and Credit Suisse declined to comment, while TD and Scotiabank did not immediately respond to Reuters’ request for comments. The Weyburn assets in southern Saskatchewan are attractive because of their light oil output and low decline, characteristics that might lead to a robust bidding process, the people said.
Located in southeast Alberta, the Palliser block is a conventional tight-oil asset. Cenovus said last year it has identified 700 drilling locations in the block with what it said are high-return potentials. The company is also selling its Pelican Lake and Suffield conventional oil and gas assets. Cenovus is under pressure because of the debt it incurred with the transformational acquisition of oil and gas assets. Its share price is down about 47 percent since the deal was announced in March, while the company said last month that Chief Executive Brian Ferguson – who had championed the transaction – would retire. Some investors have questioned whether the company can meet its asset sales targets, given that other oil firms are seeking to sell Canadian assets.