Cenovus sells Palliser oilfield for $1.3 billion

Cenovus Energy (TSX, NYSE:CVE) last week unloaded another key asset as the Canadian oil producer seeks to pay down debt incurred from purchasing ConocoPhillips’ (NYSE:COP) Canadian operations in March.

In a news release Thursday, Cenovus said it plans to raise $1.3 billion by selling its Palliser crude oil field to Schlumberger Ltd. and Torxen Energy. The sale will help the Calgary-based company to pay off a $3.6 billion bridge loan used to purchase oil sands and conventional assets from Houston-based ConocoPhillips. Cenovus, headquartered in Calgary, is targeting between $4 billion and $5 billion in divestitures this year.

“Our strategy to optimize our portfolio by selling non-core assets and using the proceeds to pay down debt is firmly on track,” president and CEO Brian Ferguson said in the statement.

Schumberger, the world’s  largest oilfield-services provider, will own Palliser while privately held Torxen will operate it, according to a statement by Schlumberger.

The Palliser Block consists of oil and gas wells, surface facilities, a pipeline network, and approximately 800,000 acres of oil and gas development rights. It currently produces about 54,000 barrels of oil a day. The partners, who formed a joint venture earlier this year, plan to drill over 1,600 wells on Palliser, which covers around 325,000 hectares is is next to acreage owned by Schlumberger and Torxen.

On September 25 Cenovus reached an agreement to sell its Suffield crude oil and natural gas operations in southern Alberta to International Petroleum Corporation for $512 million in cash. It previously sold its Pelican Lake heavy oil operations in northern Alberta for $975 million to Canadian Natural Resources Ltd. (TSX, NYSE:CNQ). The company is also marketing its Weyburn operation in Saskatchewan.

Cenovus has been one of the very few companies to revive deferred projects in the oil sands sector, following a recovery in crude prices.

Last year, the company resumed the expansion of its Christina Lake oil sands project, in northeast Alberta. Two more projects under review, known as Narrows Lake A and Foster Creek H, could add 75,000 barrels per day of new capacity in coming years.

Meanwhile on Friday Thai company PTT said it has shelved plans to develop its Mariana oil sands project due to weak oil prices. According to a report on BNN, it’s the third impairment PTT has booked on the project in three years, taking the total number of writedowns on it to US$1.8 billion.