(Reuters) - Cenovus Energy Inc will have a sale agreement for its Suffield and Pelican Lake assets by the third quarter and its total divesture may exceed its C$5-billion estimate, the company said on Thursday as its shares surged after it posted a profit.
Cenovus paid $13.3 billion in March to buy ConocoPhillips’ Canadian oil sands assets in an unpopular deal that hit its shares and has been trying to sell assets to cut debt.
The deal’s architect, Chief Executive Brian Ferguson, who announced his exit last month after the market’s averse reaction, said that in addition to Suffield and Pelican Lake, Cenovus will also sell two other oil assets.
The company’s Weyburn and Palliser properties are available, “with a target to have sale agreements announced in the fourth quarter,” Ferguson said on conference call after the company posted its quarterly results.
Reuters reported this month the company expects to raise up to C$2.5 billion from the two assets.
Cenovus Executive Vice President Al Reid said the company has hired a search firm to look for Ferguson’s replacement and seeks candidates focused on cost who would carry out company’s current plans.
Reuters reported this month that Cenovus had hired Korn/Ferry International .
“We know we have a lot to prove,” said Ferguson, who steps down Oct. 31. “Do not expect to see any ramp up in spending until we have accomplished the deleveraging of the balance sheet.”
Shares of Cenovus surged more than 9 percent to C$10.84 on Thursday after the company reported its second-quarter profit, helped by its purchase of ConocoPhillips assets.
Cenovus said the purchase boosted total production by 65 percent to 436,929 barrels of oil equivalent per day in the quarter. The deal closed on May 17.
The Calgary-based oil producer reported a net profit of C$2.64 billion ($2.1 billion), or C$2.37 per share in the quarter, compared with a loss of C$267 million or 5 Canadian cents per share, a year earlier.
The results beat analysts’ expectations, but despite Thursday’s rally, Cenovus shares have lost more than 40 percent of their value since the ConocoPhillips deal.
Desjardins analyst Justin Bouchard said investors are likely to focus on divestiture and look past the results, given that they are the first with the new assets and include “noise associated with the acquisition.”
Reporting by Yashaswini Swamynathan in Bengaluru and Ethan Lou in Calgary, Alberta; Editing by Dan Grebler