CALGARY, Alberta – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has sold its gross overriding royalty (GORR) in the Marten Hills area of Alberta to Topaz Energy Corp. for gross cash proceeds of $102 million. The sale successfully closed today with a May 1, 2021 effective date. Cenovus will use the sale proceeds to reduce net debt, consistent with its commitment to use non-core asset sales to accelerate deleveraging to achieve the company’s interim net debt target of $10 billion.
“This transaction demonstrates our ability to strategically identify opportunities in our portfolio to accelerate the deleveraging process,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “This is the first transaction of our broader initiative and we will continue to explore all options to create value for Cenovus shareholders and position our balance sheet for increasing shareholder returns.”
Cenovus retained the GORR as part of the sale of its Marten Hills oil assets to Headwater Exploration Inc. in December 2020 which also included cash, common shares and purchase warrants of Headwater. With the transaction announced today, Cenovus has generated incremental value on the Marten Hills assets and continues to participate in the upside development potential through its 50 million shares and 15 million purchase warrants in Headwater. Cenovus remains supportive of Headwater’s early success at Marten Hills.
Basis of Presentation
All financial figures and information have been prepared in Canadian dollars (which includes references to “dollars” and “$”), except where another currency has been indicated, and in accordance with International Financial Reporting Standards (“IFRS” or “GAAP”) as issued by the International Accounting Standards Board. Production volumes are presented on a before royalties basis.