CALGARY, Alberta (Reuters) - Cenovus Energy Inc (CVE.TO)(CVE.N) 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) 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.
Ferguson told media after the meeting that the roughly 87 percent vote tally reflected confidence in the deal, which is expected to close in the second quarter.
Cenovus plans to fund the deal partly through divestitures, mainly of its Suffield and Pelican Lake conventional oil and gas assets.
The company will provide more details on those in the third quarter, Ferguson said earlier on Wednesday.
Cenovus reported a C$211 million ($155.54 million) profit in the quarter ended March 31, helped by lower operating costs and higher production. Net profit was 25 Canadian cents per share, compared with a loss of C$118 million, or 14 Canadian cents per share, a year earlier.
Operating loss was 5 Canadian cents per share, compared with analysts’ average estimate of a loss of 8 Canadian cents, according to Thomson Reuters I/B/E/S.
Cenovus said operating costs for its oil sands fell 6 percent to C$8.97 per barrel, while total oil production rose about 19 percent to 234,914 barrels per day.
Reporting by Ethan Lou in Calgary, Alberta and Muvija M in Bengaluru; editing by Anil D'Silva and Richard Chang