Under the terms of the deal, ConocoPhillips will divest 50% stake in the Foster Creek Christina Lake (FCCL) oil sands partnership, as well as the majority interest in its western Canada Deep Basin gas assets.

However, ConocoPhillips Canada will retain 50% stake and ownership in the Surmont oil sands joint venture as well as 100% stake in Blueberry-Montney unconventional acreage position.

Proceeds from the sale will be used by ConocoPhillips to reduce its debt to $20bn in 2017 and increase share repurchases.

The firm also plans to triple its planned share buybacks from $1bn to $3bn in 2017.

Cenovus expects the assets considered for acquisition to have combined production of approximately 298,000 barrels of oil equivalent per day (BOE/d) in 2017.

Cenovus president and CEO Brian Ferguson said: “This transformational acquisition allows us to take full control of our best-in-class oil sands projects and to add a second growth platform across the prolific Deep Basin that provides complementary short-cycle development opportunities.”

Ferguson said the firm plans to divest a significant portion of its conventional assets to help fund the transaction.

ConocoPhillips chairman and CEO Ryan Lance said: “The transaction is accretive to our cash margins and lowers the average cost of supply of our portfolio, with no impact to our estimate of cash provided by operating activities at $50 per barrel Brent price.”

Scheduled to be closed in the second quarter of 2017, the transaction is subject to customary conditions, including the receipt of necessary regulatory approvals.


Image: The Foster Creek oil sands project in Canada. Photo: courtesy of Cenovus Energy Inc.