April 27, 2011 / 10:25 AM / 7 years ago

UPDATE 3-Cenovus eyeing range of outside investment deals

* Seeking deal for oil sands properties

* Q1 EPS C$0.06 vs est C$0.36

* Operating EPS C$0.28 vs C$0.47 yr ago

* Boosts 2011 capex by C$190 mln (Recasts to add details, executive comment)

By Scott Haggett

CALGARY, Alberta, April 27 (Reuters) - Cenovus Energy Inc (CVE.TO), which reported a 91 percent drop in first-quarter profit on Wednesday, is hunting for outside investment, but not necessarily the joint-venture deals now fashionable among oil and gas producers.

Cenovus, Canada’s fourth-largest oil and gas company, said it is examining a range of possible transactions in order to get value for some of its properties in the Alberta oil sands that it wouldn’t otherwise develop for years.

Brian Ferguson, chief executive of the oil sands producer, said that along, with the option for a joint venture, Cenovus was also examining swapping assets, the full sale of properties, or a farm-out, in which another company earns a stake in property by spending money to develop it.

“I don’t want to narrow those opportunities prematurely by saying we’re only going to consider a swap or a joint venture,” Ferguson said. “The thing that’s really important to me is doing a good transaction for Cenovus shareholders.”

Cenovus said in February it was mulling a joint venture, after Encana Corp (ECA.TO) sold a half stake in its Cutbank Ridge shale gas assets to PetroChina (601857.SS) (PTR.N) for C$5.4 billion ($5.7 billion), the largest foreign gas deal by a Chinese company, and Thailand’s PTT Exploration and Production PTTE.BK acquired 40 percent of Statoil’s STL.OL Alberta oil sands project for $2.3 billion.


Cenovus’s first-quarter profit plunged 91 percent and missed analysts’ expectations by a wide margin, mostly because of lower oil and natural gas prices.

For the quarter ended March 31, the company earned C$47 million ($49.4 million), or 6 Canadian cents a share, compared with C$525 million, or 70 Canadian cents a share, a year ago.

On an operating basis, it earned C$209 million, or 28 Canadian cents per share, down from C$353 million, or 47 Canadian cents, a year ago.

Analysts, on average, had expected earnings of 36 Canadian cents a share, according to Thomson Reuters I/B/E/S.

The company’s cash flow, a key indicator of its ability to fund a slate of planned projects, fell nearly 4 percent to C$693 million, or 91 Canadian cents a share.

For 2011 Cenovus expects to spend C$190 million more on capital investment and sees refining operating cash flow of C$550 million to $750 million.

Production from its Foster Creek project averaged 57,744 barrels per day, up 13 percent from last year, and output from its Christina Lake project climbed 22 percent to 9,084 bpd.

The two projects are part of a joint venture with ConocoPhillips (COP.N) that includes refineries in Wood River, Illinois, and Borger, Texas.

Cenovus shares fell 11 Canadian cents to C$36.12 on the Toronto Stock Exchange on Wednesday.

$1=$0.95 Canadian Additional reporting by Abhiram Nandakumar; editing by Rob Wilson

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