Cenovus begins to sell off non-core assets to retire debt
Cenovus Energy Inc. is selling an Alberta production royalty interest to Topaz Energy Corp. for $102 million, the first step in a plan to sell non-core assets to retire debt in the wake of its takeover of Husky Energy Inc. early this year.
Cenovus says it retained the royalty interest in its Marten Hills oil assets when it sold them to Headwater Exploration Inc. in December.
At the time, it said the assets which were producing about 2,800 barrels per day of medium gravity oil were being sold for $35 million in cash, 50 million shares of Headwater and 15 million Headwater purchase warrants exercisable at $2 per share with a three-year term.
Cenovus CEO Alex Pourbaix has said that sales of non-core assets would help the company reach its year-end 2021 goal to reduce net debt to less than $10 billion.
He has said the company is weighing assets for potential sale that could include Husky’s Asia-Pacific offshore natural gas projects with Chinese partner CNOOC Ltd. in China and Indonesia, and Husky’s chain of Canadian retail fuel stations.
Topaz is a company created by Tourmaline Oil Corp. to hold petroleum processing and handling assets. It was taken public in a $250-million initial public offering in October.
“This is the first transaction of our broader initiative and we will continue to explore all options to create value for Cenovus shareholders and position our balance sheet for increasing shareholder returns,” said Pourbaix in a news release.