Cenovus selling Pipestone and Wembley assets to NuVista for $625 million

Cenovus says it's working 'towards streamlining and rationalizing our acreage in the Deep Basin'

Mario ToneguzziCenovus Energy Inc. is selling its Pipestone and Wembley natural gas and liquids business in northwestern Alberta to NuVista Energy Ltd. for $625 million.

The transaction also includes the Pipestone Business’s 39 per cent operated working interest in the Wembley gas plant. The sale is expected to close in the third quarter of 2018, subject to customary closing conditions, said Cenovus.

“I’m pleased with this important step towards streamlining and rationalizing our acreage in the Deep Basin,” said Alex Pourbaix, president and chief executive officer, in a news release. “These are high quality assets and we believe the Pipestone transaction will provide compelling value for Cenovus shareholders.”

As with previous divestitures, proceeds from this sale will be used to help the company’s balance sheet, the company added.

“Cenovus is in various stages of evaluating and marketing other non-core Deep Basin assets for potential divestment. The company is encouraged by the high level of interest it has seen in these processes but remains resolute that all asset dispositions are contingent upon receiving fair value for the company’s shareholders,” it said.

In a news release, NuVista said the Pipestone assets are situated primarily in the premium core of the condensate-rich Alberta Triassic Montney fairway and on 35,250 net acres of land featuring four layers of Montney development.

“The assets of the acquired business represent a 29 per cent increase to NuVista’s current Montney land position. The acquired business includes 9,600 Boe/d of production and significant infrastructure. The acquisition will be funded with NuVista’s expanded credit facilities, a $214 million private placement … of subscription receipts …  and a concurrent $170 million prospectus offering … of subscription receipts. A syndicate of underwriters led by CIBC Capital Markets, Peters & Co. Limited and RBC Capital Markets … have agreed to purchase the Financings, which will be offered at a price of $8.10 per subscription receipt for gross proceeds of $384 million,” it said.

NuVista said it will also raise by way of a private placement, up to approximately $35 million in common shares on a “flow-through” basis.

Respected business writer Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald in various capacities, including 12 years as a senior business writer.

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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