Cenovus confirms it is in talks to sell royalty lands

Fri Jun 19, 2015 7:59am EDT
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TORONTO, June 19 (Reuters) - Cenovus Energy Inc confirmed on Friday it is in discussions with another party about the sale of its royalty interest and mineral fee title lands.

Reuters reported on Thursday that Cenovus, Canada's second largest independent oil producer, is in exclusive talks to sell the assets to the Ontario Teachers' Pension Plan in a deal that could fetch roughly C$2.5 billion to C$3 billion.

The assets are privately held oil- and gas-producing parcels of land not subject to the royalties that producers pay to governments on publicly owned lands. Instead, producers pay a government mineral tax, while royalties go to the property owners.

Cenovus said on Friday there was no assurance any agreement will result from the discussions, and that it does not intend to comment again until a decision is reached.

In a note to clients on Friday, following news of the planned sale, CIBC analyst Arthur Grayfer said that, given the likely size of the proceeds, Cenovus would have to sell both third-party and company-owned lands in one large transaction. (Reporting by Euan Rocha; Editing by Jeffrey Benkoe)