Cenovus Energy Inc. (TSX:CVE), an oil and gas company, has agreed to buy the remaining 50% interest on the Sunrise Oil Sands project located in Alberta from BP PLC, a British Oil and Gas company, for $600 million. An important part of the purchase will be Cenovus’s 35% position in the undeveloped Bay du Nord project, which is located offshore of Newfoundland and Labrador. The transaction for the purchase of Sunrise has been in progress since the start of last month. The company hopes to close the deal by the end of the third fiscal quarter.
Cenovus is confident that with the full ownership of Sunrise, its strength in the Oil Sands sector will be enhanced. Although Cenovus Energy has been operating Sunrise since the beginning of 2021 after the Husky Energy transaction, the company does not have the full working interest. After acquiring the remaining working interest, Cenovus is ready to apply its oil sands operating model to the asset itself.
Alex Pourbaix, the CEO and President of Cenovus Energy, said, “Acquiring the remaining working interest in Sunrise enables us to fully benefit from the significant optimization opportunities available…we expect to increase production at Sunrise while driving down sustainable capital, operating costs, and emissions intensity.”
Cenovus Energy Inc. announced that the current production from the newly acquired asset is approximately 50,000 barrels per day. Through a multi-year development program, the company expects to achieve a capacity of 60,000 barrels per day, a 20% production increase. The company is also working to execute and finalize the acquisition immediately in order to accredit its adjusted funds and cash flow from operating activities.
The announcement of the acquisition of the outstanding 50% interest in the Sunrise oil assets did not positively impact Cenovus Energy’s stocks. Instead, the CVE stock is down by 3.92%. It was trading at $28.91 per share at the time of writing this report.
Featured Image: Megapixl © Jaochainoi
