CALGARY, Alberta – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has entered into agreements with its partners in the Atlantic region to restructure its working interests in the Terra Nova and White Rose projects, providing improved economics for the company’s regional portfolio.
These agreements will increase Cenovus’s working interest in Terra Nova and, if a decision is taken to restart West White Rose, reduce the company’s working interest in the White Rose field.
Cenovus’s working interest in Terra Nova will be 34%, up from 13%. The company will receive $78 million from the exiting partners as a contribution towards future Terra Nova asset retirement obligations. The Terra Nova asset life extension project will proceed, extending the life of the field to 2033. Production is expected to resume before the end of 2022, with gross production expected to reach approximately 29,000 barrels per day in 2023. Including funding from the Government of Newfoundland and Labrador, the net to Cenovus outlay to restart Terra Nova is expected to be approximately $60 million to first oil.
“Sanctioning the Terra Nova asset life extension provides a superior value proposition for our shareholders compared with the alternative of abandoning and decommissioning the project,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “While we are still evaluating whether to proceed with West White Rose, the capital risk in our portfolio will be reduced if we decide to move forward.”
Cenovus and Suncor, as part of the restructuring, have entered into an agreement whereby Cenovus will decrease its working interest in the White Rose field and satellite extensions while Suncor will take a larger stake, contingent upon approval of the West White Rose project restarting. Cenovus would reduce its stake in the original field to 60% from 72.5% and to 56.375% from 68.875% in the satellite extensions. Cenovus and its partners continue to evaluate their options on the West White Rose Project, with a decision to be made by mid-2022.
Cenovus continues to progress swiftly towards its $10 billion net debt target, which it expects to achieve later this year. At that point the company expects to begin allocating some of its free funds flow toward enhancing shareholder returns.