Cenovus to Divest Assets for $660M

Cenovus Energy Inc. (CVE) has agreed to divest its Husky retail fuels network and the Wembley assets in its Conventional business for an all-cash deal of nearly $660 million. The company involves in the development, production and marketing of crude oil, natural gas liquids (NGLS) and natural gas in Canada.

CVE plans to use proceeds from this sale to repay net debt towards its longer-term target of $8 billion and enhance capacity to increase shareholder returns. (See Cenovus stock charts on TipRanks)

Husky Retail Fuels Network

Cenovus will be selling 337 gas stations to Parkland Corporation and Federated Co-operatives Limited for $420 million. Meanwhile, the company will be keeping its commercial fuels business, which includes about 170 cardlock, bulk plant and travel centre locations.

The deal is likely to close in mid-2022, subject to approval under the Competition Act (Canada) and other customary closing conditions.

Conventional Segment

The company has agreed to sell its primarily Montney assets in Wembley for $238 million in cash. This transaction is expected to close in December 2021.

Cenovus informed that the total production from this asset averaged nearly 3,200 barrels of oil equivalent per day in 2021, along with about 38% oil and natural gas liquids.

CEO Comment

The President and CEO of Cenovus, Alex Pourbaix, said, “This is another demonstration of Cenovus delivering on opportunities to continue to optimize our portfolio and unlock value from assets that will not attract significant investment in our business. With these latest transactions, we now expect to realize more than $1.1 billion of total proceeds from sales announced in 2021.”

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Wall Street’s Take

On November 19, Morgan Stanley analyst Devin McDermott maintained a Buy rating on CVE with a price target of $16.48 (upside potential of 39%).

Overall, the Street has a Strong Buy consensus rating based on 12 Buys and 1 Hold. The average Cenovus price target of $15.75 implies 32.8% upside potential.

Blogger Opinion

TipRanks data shows that financial blogger opinions are 100% Bullish on CVE, compared to a sector average of 71%.

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