Pipestone, Wembley natural gas and liquids business located in northwestern Alberta
Cenovus Energy announced on Friday that it along with one of its subsidiaries have agreed to sell the general partnership that holds the Pipestone and Wembley natural gas and liquids business in northwestern Alberta.
The deal which is set to close during the third quarter of this year is valued at $625 million.
Calgary’s Nu-Vista Energy is the buyer Cenovus’ stake in the operation.
“This is a rare and compelling acquisition for NuVista. It adds significantly to our core of the top condensate-rich lands in the Pipestone area which are de-risked to a high degree, with economics that rank in the best echelon of our development opportunities,” said Nu-Vista in a press release.
NuVista says production at the acquired business is about 9,600 barrels of oil equivalent per day.
According to the Cenovus, the deal includes the Pipestone Business’s 39 per cent working interest in the Wembly gas plant.
“I’m pleased with this important step towards streamlining and rationalizing our acreage in the Deep Basin,” said Alex Pourbaix, President & Chief Executive Officer. “These are high quality assets and we believe the Pipestone transaction will provide compelling value for Cenovus shareholders.”
Proceeds from the Pipestone sale will be used to cut its $9.5 billion debt.
In a press release, Cenovus says it is in “various stages of evaluating and marketing other non-core Deep Basin assets for potential divestment”. The company says it is encouraged by a high level of interest in the assets, but it says it will ensure that all deals receive fair value for Cenovus shareholders.
Deep Basin assets were purchased by Cenovus from ConocoPhillips in a controversial deal in 2017.