Cenovus to raise up to C$1.73 bln through share sale

Tue Feb 17, 2015 5:17pm EST
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CALGARY, Alberta Feb 17 (Reuters) - Cenovus Energy Inc , Canada's No. 2 independent oil producer, said on Tuesday it has agreed to sell 67.5 million shares to a group of underwriters as it seeks to raise about C$1.5 billion ($1.21 billion) for its 2015 capital spending budget as oil prices remain weak.

The company said it would sell the shares at a price of C$22.25 million each to a group of underwriters led by RBC Capital Markets and TD Securities Inc. The deal, which includes an option to sell an additional 10.1 million shares if demand warrants, is expected to close in the first week of March.

If the option is exercised, gross proceeds will rise to about C$1.73 billion.

Cenovus - whose main holdings are the Foster Creek and Christina Lake oil sands project it jointly owns with ConocoPhillips - is looking for cash to pay for a capital spending program that has already been slashed twice from 2014 levels to cope with oil prices that have fallen by half since June.

The secondary offering is the company's first since it was spun off from Encana Corp in 2009. The company said it may also use the cash to repay its outstanding commercial paper or for general corporate purposes.

Cenovus shares were halted on the Toronto Stock Exchange late on Tuesday. They last traded down 3.7 percent at C$23.29. ($1 = 1.2376 Canadian dollars) (Reporting by Scott Haggett; Editing by Jonathan Oatis)