Cenovus faces investor displeasure after ConocoPhillips deal

Wed Apr 26, 2017 7:55pm EDT
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By Ethan Lou

CALGARY, Alberta (Reuters) - Cenovus Energy Inc (CVE.TO: Quote)(CVE.N: Quote) won about 87 percent of shareholders' votes for its board of director slate on Wednesday, below previous near-unanimous approvals, as some voters protested the company's C$17 billion ($12.6 billion) purchase of ConocoPhillips (COP.N: Quote) assets.

The deal, announced in March, effectively doubled the size of the Canadian oil company, but wiped out about a fifth of its market value, with some investors complaining that the price was too high.

Even as Cenovus posted better-than-expected first-quarter earnings on Wednesday, questions about the deal and Cenovus' ability to execute it dogged a conference call about the results and the shareholders meeting later that day.

A shareholder who wanted to be known only as Bernie told management: "If you guys are so confident on the deal, why don't shareholders have the opportunity to vote?"

Investors had been "left out in the cold," he said. "I very much resent that."

Chairman Michael Grandin responded that the "once-in-a-lifetime" deal required confidentiality for negotiations that a shareholder vote would deny.

Chief Executive Brian Ferguson said the Deep Basin natural gas asset bought from ConocoPhillips, which some investors said was incompatible with Cenovus' oil business, was "absolutely core" to the company and could be its "crown jewel."

Cenovus could reduce spending on Deep Basin to focus on oil sands, and also sell part of that natural gas asset, he added.   Continued...