Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has reached an agreement to purchase the remaining 50% of the Sunrise oil sands project in northern Alberta from bp. Total consideration for the transaction includes $600 million in cash, a variable payment with a maximum cumulative value of $600 million expiring after two years and Cenovus’ 35% position in the undeveloped Bay du Nord project offshore of Newfoundland and Labrador. The transaction has an effective date of May 1, 2022 and is expected to close in the third quarter of this year, subject to normal closing conditions and purchase price adjustments.
Full ownership of Sunrise further strengthens Cenovus’ core strength in the oil sands. Sunrise has been operated by the company since early 2021, following the Husky Energy transaction, and Cenovus is now in the early stages of applying its oil sands mining model to this asset.
“The acquisition of the remaining working interest in Sunrise allows us to take full advantage of the significant optimization opportunities available to us,” said Alex Pourbaix, President and CEO of Cenovus. “By applying Cenovus’ advanced operating techniques, we expect to increase Sunrise production while reducing sustaining capital, operating costs and emissions intensity.”
Cenovus currently operates Sunrise and owns 50% of the assets through the Sunrise Oil Sands partnership, with bp. Current production from the asset is approximately 50,000 barrels per day (bbls/d), and the company plans to achieve nameplate capacity of 60,000 bbls/d through a multi-year development program. The acquisition is expected to be immediately accretive to adjusted cash flow and cash flow from operating activities.
Cenovus’ corporate guidance dated April 26, 2022 does not reflect this acquisition. The company expects to update its guidance with its second quarter results in July 2022.
This document contains certain forward-looking statements and information (collectively, “forward-looking information”) within the meaning of applicable securities laws, including the United States Private Securities Litigation Reform Act of 1995, regarding Cenovus’ current expectations, estimates and projections into the future, based on certain assumptions made in light of experiences and perceptions of historical trends. Although Cenovus believes that the expectations represented by such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct.
Forward-looking information contained herein is identified by words such as “expected”, “expects”, “opportunities”, “will” or similar expressions and includes suggestions of future results, including, but not limited to, statements about: compliance with the closing of the transaction; generation (including reaching nameplate capacity), sustaining capital costs, operating costs, emissions intensity and optimization at the Sunrise facility; the accretive effect of the acquisition of Sunrise on adjusted cash flow and cash flow from operating activities of Cenovus.
Developing forward-looking information involves making a number of assumptions and considering certain risks and uncertainties, some of which are unique to Cenovus and some of which apply to the industry generally. Factors or assumptions underlying the forward-looking information contained in this press release include, but are not limited to: the timely closing of the transaction; Cenovus’ success in applying advanced mining techniques to Sunrise; Cenovus’ ability to realize increases in adjusted cash flow and cash flow from operating activities as a result of the acquisition of Sunrise.
Except as required by applicable securities laws, Cenovus disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are advised that the above lists are not exhaustive and are established as of the date hereof. Events or circumstances could cause actual results to differ materially from those estimated or projected and expressed or implied by the forward-looking information. For further information regarding Cenovus’ material risk factors, assumptions made and risks and uncertainties that could cause actual results to differ from expected results, see the “Risk Management and Risk Factors” sections and “Advice” in Cenovus’ MD&A for the periods ending December 31, 2021 and March 31, 2022, and to the risk factors, assumptions and uncertainties described in other documents Cenovus files from time to time with the authorities. securities regulators in Canada (available on SEDAR at sedar.com, on EDGAR at sec.gov and the Cenovus website at cenovus.com).
Cenovus Energy Inc.
Cenovus Energy Inc. is an integrated energy company with oil and natural gas production operations in Canada and the Asia-Pacific region, as well as upgrading, refining and marketing operations in Canada and the United States. . The company is focused on managing its assets in a safe, innovative and profitable manner, integrating environmental, social and governance considerations into its business plans. Cenovus’ common shares and warrants are listed on the Toronto and New York stock exchanges, and the company’s preferred shares are listed on the Toronto Stock Exchange. For more information, visit cenovus.com.
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