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Canada’s Cenovus to divest Palliser oil and gas assets for $1bn

EBR Staff Writer Published 20 October 2017

Integrated oil firm Cenovus Energy has agreed to divest its Palliser crude oil and natural gas assets in southeastern Alberta, Canada to Torxen Energy and Schlumberger for C$1.3bn ($1bn).

Under the terms of the deal, Torxen and Schlumberger will purchase the Palliser Block comprising oil and gas wells, surface facilities, a pipeline network, and approximately 800,000 acres of oil and gas development rights.

The sale is part of Cenovus Energy’s strategy to divest non-core assets portfolio and use the proceeds to reduce debt.

Cenovus Energy president and CEO Brian Ferguson said: “We continue to target between $4bn and $5bn in announced asset sale agreements by the end of the year, and we remain committed to returning to our long-term debt ratio target.”

Upon completion of the deal, Schlumberger will be the majority non-operating owner and will be the services provider for the Palliser oil and natural gas assets,which has current production capacity of approximately 54,000 BOE/d.Torxen Energy will serve as the operator.

Schlumberger new ventures executive vice-president Patrick Schorn said: “By leveraging our reservoir knowledge, oilfield services technology and project management expertise, we expect to lower development costs and maximize the value of this asset—in a market where our traditional business model is challenged to deliver the required financial returns.”

The deal, which is subject to customary closing conditions, is scheduled to be completed in the fourth quarter of this year.

Schlumberger said that more than 1,600 oil wells are planned to be drilled as part of the oil-focused development strategy, starting next year.

Image: Cenovus Energy intends to optimize its non-core assets portfolio in Canada. Photo: courtesy of suwatpo/FreeDigitalPhotos.net.