Cenovus Energy reaches agreement to sell Suffield assets for $512M
Cenovus Energy has entered into a definitive agreement to sell its Suffield crude oil and natural gas operations in southern Alberta to International Petroleum Corporation for gross cash proceeds of $512M. The parties have also agreed to a deferred purchase price adjustment that gives Cenovus the opportunity to benefit from potential additional payments of up to $36M. The sale of the Suffield assets, which include Cenovus's properties on Canadian Forces Base Suffield and the adjacent Alderson property, is expected to close in the fourth quarter, subject to closing conditions. Net proceeds from the Suffield sale, and those from the sale of Cenovus's Greater Pelican Lake assets announced on September 5, will be applied to reduce the company's $3.6B asset-sale bridge facility. Cenovus remains focused on reaching its target of being below two times net debt to adjusted EBITDA. The deferred purchase price adjustment is a two-year commitment that begins on January 1, 2018. Under the terms of the agreement, International Petroleum will make payments to Cenovus for each month in which the average daily price of West Texas Intermediate is above $55 per barrel or the price of Henry Hub natural gas is above $3.50 per million British thermal units. Deferred purchase price adjustment payments are capped for each commodity, with a maximum combined payment of $36M.