(New throughout, adds comments from people close to chief executive)
By Ethan Lou and Nia Williams
TORONTO, April 11 (Reuters) - Cenovus Energy Inc will do more hedging after its acquisition of ConocoPhillips assets, the Canadian company’s Chief Executive Brian Ferguson said on Tuesday as he mounted a charm offensive on investors who balked at the deal.
Ferguson is known as a low-key and conservative chief executive in the western Canadian oil patch, and his C$17.7-billion ($13.3-billion) bid last month for the assets of ConocoPhillips, the latest international player to exit the country, had confounded investors and analysts.
The deal, which effectively doubles the size of Cenovus while denting its pristine balance sheet and making it more exposed to changes in oil prices, is seen as a test for Ferguson’s legacy. The 60-year-old has been with the company and its predecessor for most of his life.
“When we close the transaction, we would definitely be adding more hedge volumes,” Ferguson said at an industry event in Toronto, where he was seeking to sell his ambitious plan. Investors last month sent the company’s shares crashing in their biggest single-day drop on news of the deal.
Despite a previously strong balance sheet, Cenovus had stayed on the sidelines even as domestic peers eagerly bought assets from retreating foreign oil majors. Eventually, weighed by C$4 billion ($3 billion) cash, Ferguson signed what some analysts and investors said was an uncharacteristic deal.
Ferguson said on Tuesday that the “strategic rationale” for the deal is well understood by investors, although he noted that some have questioned the company’s plan for financing it through selling shares, divestitures and taking on debt.
The company has 75 percent of permanent financing in place and has seen strong interest in the assets it is selling, Ferguson said, adding, “We’ve had multiple inbound inquiries from various sources - private equity funds, pension plans, smaller companies.”
Some who know Ferguson well say he has made the right move at the right time.
“When he puts a strategy in place it will be things he sees coming down the road that are perhaps not what other people will see,” said Greg Stringham, a former executive with industry association the Canadian Association of Petroleum Producers who has known Ferguson for 20 years.
A person close to Cenovus who has known and worked with Ferguson for over two decades said the deal will determine how Ferguson is remembered in the oil patch.
“When you double the size of the company, there will be a jury at some point, whether it is six months from now or six years from now,” the person said.
$1 = 1.3416 Canadian dollars Additional Reporting by John Tilak; Editing by Jim Finkle, Jonathan Oatis and Frances Kerry