UPDATE 2-Cenovus says dividend safe despite loss on low oil prices

Wed Apr 29, 2015 1:14pm EDT
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(Adds details and comments in the first seven paragraphs; updates share price)

CALGARY, Alberta, April 29 (Reuters) - Cenovus Energy Inc , Canada's No.2 independent oil producer, said on Wednesday it has no plans to tinker with its dividend despite reporting an unexpectedly large quarterly loss due to weak oil prices.

Brian Ferguson, chief executive of the Calgary, Alberta-based oil sands developer, said he is not interested in having a volatile dividend, even as the company swung to a net loss of C$668 million ($554 million) for the first quarter on oil prices that were half that of the year-before level.

"We take a long-term view of the dividend and target a sustainable payout level," Ferguson said on a conference call. "I do not want a variable dividend."

The company declared an unchanged second-quarter dividend of 26.62 Canadian cents per share on Wednesday. It acknowledged, however, that it had considered a payout cut earlier this year but decided instead to issue shares to raise net proceeds of C$1.4 billion to bolster a balance sheet weakened by the oil-price drop.

Ferguson also said there has been substantial interest in several properties, called fee lands, that Cenovus has readied for sale. The properties are wholly owned by the company and production is not subject to government royalties.

While buyers have been conducting due diligence on the properties, Ferguson said the timing of the divestment depends on market conditions.

"We are ready to pursue a sale or initial public offering when the timing presents itself and the valuation meets our expectations," he said.

Cenovus reported an operating loss of 11 Canadian cents per share for the quarter ended March 31, bigger than the average analyst estimate of 9 Canadian cents, according to Thomson Reuters I/B/E/S.   Continued...