Cenovus Energy (CVE) announces plan to restructure Atlantic assets
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Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has entered into agreements with its partners in the Atlantic region to restructure its direct interests in the Terra Nova and White Rose projects, thereby improving the profitability of the regional portfolio of the company.
These deals will increase Cenovus’ working interest in Terra Nova and, if a decision is made to restart West White Rose, will reduce the Company’s working interest in the White Rose field.
Cenovus’ direct interest in Terra Nova will be 34%, compared to 13%. The company will receive $ 78 million from exiting partners as a contribution to future Terra Nova asset retirement obligations. The Terra Nova asset life extension project will continue, extending the life of the field until 2033. Production is expected to resume before the end of 2022, with gross production expected to reach approximately 29,000 barrels. per day in 2023. Including funding from the Government of Newfoundland and Labrador, Cenovus’ net expense to restart Terra Nova is expected to be around $ 60 million for first oil.
“The approval to extend the life of Terra Nova’s assets offers a superior value proposition to our shareholders over the alternative of abandonment and decommissioning of the project,” said Alex Pourbaix, president and CEO of Cenovus. “While we are still assessing whether to proceed with West White Rose, the capital risk in our portfolio will be reduced if we decide to go ahead.”
Cenovus and Suncor, as part of the restructuring, have reached an agreement whereby Cenovus will reduce its working interest in the White Rose field and satellite expansions while Suncor will take a larger interest, subject to approval of the restart. of the West White Rose project. Cenovus would reduce its stake in the original field to 60% instead of 72.5% and to 56.375% instead of 68.875% in satellite extensions. Cenovus and its partners continue to assess their options on the West White Rose project, a decision to be made by mid-2022.
Cenovus continues to make rapid progress toward its $ 10 billion net debt goal, which it expects to achieve later this year. At this point, the company plans to start allocating a portion of its free cash flow to improving shareholder returns.
Advisory Presentation basis Production volumes are presented before royalties, unless otherwise indicated.