CALGARY, Alberta – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has reached an agreement to purchase the remaining 50% of the Sunrise oil sands project in northern Alberta from bp. Total consideration for the transaction includes $600 million in cash, a variable payment with a maximum cumulative value of $600 million expiring after two years, and Cenovus’s 35% position in the undeveloped Bay du Nord project offshore Newfoundland and Labrador. The transaction has an effective date of May 1, 2022 and is anticipated to close in the third quarter of this year, subject to closing conditions and normal purchase price adjustments.
Full ownership of Sunrise further enhances Cenovus’s core strength in the oil sands. Sunrise has been operated by the company since the beginning of 2021, following the Husky Energy transaction, and Cenovus is now in the early stages of applying its oil sands operating model at this asset.
“Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimization opportunities available,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “By applying Cenovus’s advanced operating techniques, we expect to increase production at Sunrise while driving down sustaining capital, operating costs and emissions intensity.”
Cenovus currently operates Sunrise and owns 50% of the asset through the Sunrise Oil Sands Partnership, with bp. Current production from the asset is approximately 50,000 barrels per day (bbls/d), and the company expects to achieve nameplate capacity of 60,000 bbls/d through a multi-year development program. The acquisition is expected to be immediately accretive to adjusted funds flow and cash from operating activities.
Cenovus’s corporate guidance dated April 26, 2022 does not reflect this acquisition. The company plans to update guidance with its second quarter results in July 2022.