Cenovus brought in BMO Capital Markets and TD Securities to each sell a separate upstream asset in the Deep Basin.  Cenovus photo.

Cenovus raising billions to reduce debt burden following $17 billion ConocoPhillips oil sands assets buy last year

Canadian energy company Cenovus is looking for a partner fund $1.3 billion in costs to build supporting infrastructure at the firm’s Narrows Lake oil sands project, according to Reuters.

The Calgary-based company is trying to raise billions to cut its debt burden after purchasing ConocoPhillips natural gas and oil sands assets for $17 billion last year.

Following the purchase, shareholders grew concerned about the deal that doubled Cenovus’ size, and also strained its financial position.  Since then, the company cut jobs and costs and began selling its non-core assets and has raised nearly $4 billion from divestments in 2017.

Part of the plan to ease stress on the balance sheet includes securing funds from an outside partner to finance construction of  infrastructure at the first phase of the Narrows Lake oil sands project, located about 150 Km southeast of Fort McMurray.

In exchange, the financing company would enter into a long-term agreement with Cenovus to utilize the assets.

Once complete, the Narrows Lake project will be the company’s third major oil sands project and is expected to produce a maximum of 65,000 barrels of oil per day.

So far, Cenovus has spent about $700 million to advance the Narrows Lake project and expects to spend another $1.6 billion to $1.9 billion to get the site ready for production, according to Reuters’ sources.

The sources also say that earlier in the month, Cenovus hired Credit Suisse and RBC Capital Markets to be advisers on the Narrows Lake infrastructure fundraising.  Reuters reports a teaser document has been sent to potentially interested partners.

Cenovus, Credit Suisse declined to comment on the Reuters’ story and RBC did not immediately respond to a request for comment.

As well, the company is looking at further sales at its Deep Basin position this year.  The Deep Basin is located along the eastern slopes of the Rocky Mountains in northwestern Alberta and northeastern British Columbia

To assist in the sale, BMO Capital Markets and TD Securities have been commissioned to each sell a separate upstream asset in the Deep Basin, according to Reuters.  Both did not comment on the story.

Late last year, CIBC Capital Markets was appointed to divest gas assets in the Deep Basin, which have been deemed non-core by Cenovus.