October 27, 2011 / 5:00 PM / in 6 years

Cenovus moving forward with joint-venture talks

CALGARY, Alberta (Reuters) - Cenovus Energy Inc (CVE.TO) is ready to begin talks with potential joint-venture partners looking for a piece of the company’s oil sands holdings in northern Alberta, the company’s chief executive said on Thursday.

Cenovus, Canada’s No. 2 independent oil exploration and production company, said in February it wanted a partner to help speed development of some of its oil sands properties.

Brian Ferguson, the company’s chief executive, said the potential deal would include a stake in its planned Telephone Lake project, where it plans a 90,000 barrel per day thermal oil sands project to tap reserves totaling more than 1.3 billion barrels.

“There is lots of interest (from) very qualified parties, substantial entities, given the world-class scale of the opportunity here,” Ferguson said on a conference call. “Data rooms have opened, management presentations and discussions with companies that have qualified to get into the data room will begin in the next week or so.”

Oil sands and shale gas developers in Canada, including Encana Corp (ECA.TO), Talisman Energy Inc TLM.TO and Statoil (STL.OL) have already lined up joint-venture partners willing to contribute the cash needed to develop their vast reserves in northern Alberta and British Columbia.

Ferguson said Cenovus was not yet willing to limit itself to a cash deal and asset swaps could be part of the final transaction.

“We very much keeping an open mind and don‘t, in any way, want to stifle any creativity by those folks that are in the data room,” he said.

While the company had expected to announce a deal by year-end, Ferguson said the deadline could be extended.

“If it takes us a few extra weeks then we’ll certainly take that time to make sure we get it right,” he said.

Ferguson’s comments came on a call held to discuss Cenovus’s third-quarter earnings, which were released earlier on Thursday. The company said its net income rose 73 percent to C$510 million ($515 million) but came up shy of analysts’ expectations.

Cenovus shares were up 13 Canadian cents at C$36.34 at midday on Thursday on the Toronto Stock Exchange.

$1=$0.99 Canadian Reporting by Scott Haggett; editing by Peter Galloway

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