Canadian oil producer Cenovus Energy is considering a sale of conventional oil and gas assets in the Deep Basin of Alberta as it looks to cut debt after the recent takeover of oil sands rival MEG Energy, two sources familiar with the matter told Reuters.
Cenovus has reached out to potential buyers in recent weeks to gauge interest in the assets, which could fetch around C$3 billion ($2.17 billion), the sources said. They cautioned the plans are still at an early stage, and Cenovus could ultimately decide to retain the assets.
The sources requested anonymity to discuss confidential details. Cenovus did not immediately respond to a request for comment.
Straddling Alberta and British Columbia, the Deep Basin is a conventional, natural gas-heavy formation lying northeast of the Rocky Mountain belt. Conventional oil and gas assets typically refer to well-established, mature fields that do not require complex drilling technologies but have steadily declining output.
Cenovus’ plans to possibly sell its Deep Basin assets come as it sharpens its focus on its core oil sands business after completing a C$8.5 billion acquisition of MEG Energy in November, when it added the smaller rival’s highly coveted Christina Lake project to its portfolio after a bitter takeover battle with Adam Waterous’ Strathcona Resources.
The company last month said it expects to invest up to C$3.6 billion of capital in its oil sands business this year, up from as much as C$2.8 billion allocated in the 2025 budget. By contrast, the conventional business, which includes the Deep Basin assets, was allocated up to C$500 million of capital for 2026, from as much as C$400 million last year.
A potential sale of the Deep Basin assets would also help Cenovus clean up its balance sheet. The Calgary-headquartered company’s net debt jumped to around C$10.7 billion after the MEG Energy takeover as it assumed about C$800 million of MEG’s debt and took out a C$2.7 billion loan to fund the deal, according to Morningstar DBRS estimates.
Cenovus had assured investors it would bring its net debt down to C$4 billion over time. A sale of the Deep Basin assets could help the company get closer to that target.
Cenovus last month forecast production from conventional assets would average up to 125,000 barrels of oil equivalent per day in 2026.
In addition to the Deep Basin, Cenovus’ conventional assets include holdings in the Montney and Rainbow Lake regions of Canada.
(Reporting by Shariq Khan in New York; Additional reporting by Amanda Stephenson in Calgary; Editing by Chris Reese)