Cenovus sells Saskatchewan oil assets for $240M

Cenovus sells Saskatchewan oil assets for $240M Economic Development Oil & Gas SouthWest Saskatchewan  Saskatchewan Oil & Gas Production

Cenovus Energy announced a deal Tuesday to sell Saskatchewan oil assets to Surge Energy for $240 million.

Photograph by: Mikael Kjellstrom (Kjellstr?m) , Mikael Kjellstrom (Kjellstr?m)

CALGARY — A four-month marketing process has resulted in Cenovus Energy Inc. agreeing to sell southern Saskatchewan tight oil assets for $240 million to a Calgary junior.

Cenovus, better known for its thermal oilsands production, reported Tuesday after markets closed that it had struck a deal to sell its Shaunavon package, about 14,000 hectares producing about 3,600 barrels of oil per day, to Surge Energy Inc.

“We believe they are quality assets but after a portfolio review we identified them for sale just because we didn’t feel we would be able to scale them up to a size that would be material,” said Cenovus spokeswoman Jessica Wilkinson.

A second set of assets, in the Saskatchewan Bakken, producing 700 bpd remains on the block. Cenovus began marketing the two parcels in February.

A transaction had been predicted by some analysts who follow Surge Energy, a company whose chairman, Paul Colborne, moved into the chief executive’s role last month.

In a separate release on Tuesday, Surge said it will raise the funds to make the deal through a $225-million bought deal sale of shares with a syndicate of underwriters.

It also announced that its board had approved its transformation to a moderate growth, dividend-paying model and that it will begin paying 40 cents per share per year in August.

Surge said the Shaunavon deal equates to $22.59 per barrel of reserves and $67,000 per flowing barrel, adding that it expects to book additional reserves on the land through exploration and waterflood enhanced oil recovery.

It said it now expects to have first-quarter 2014 production of 12,000 bpd, 78 per cent oil and liquids, up from previous estimates of 8,400 bpd, 71 per cent liquids.

 

 

Read more: http://www.calgaryherald.com/Cenovus+sells+Saskatchewan+assets+240M/8511066/story.html#ixzz2VwqJ66IH

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