Cenovus Energy has agreed to divest its 100% owned Tucker oil sands project in Canada to an undisclosed buyer for C$800m ($625m) in cash.

The Canadian energy company said that the sale of the thermal asset will further expedite the reduction of its debt and improve its capacity to boost returns to shareholders.

The Tucker oil sands project is expected to have an average production ranging between 18,000 barrels per day and 21,000 barrels per day in 2022.

It is one of the four oil sands projects that are being operated by Cenovus Energy in Alberta, the other three include Christina Lake, Foster Creek, and Sunrise.

Estimated to contain 1.27 billion barrels of original bitumen, Tucker has been designed to recover around 350 million barrels over a project life of 35 years.

Cenovus Energy gained access to the thermal asset following its C$3.8bn ($2.97bn) merger with Husky Energy, which closed earlier this year.

The sale of the asset, which is subject to customary closing conditions, is likely to close in late January.

Inclusive of the deal, Cenovus Energy estimates to realise nearly C$2bn ($1.56bn) of total proceeds from asset sales announced this year.

Cenovus Energy president and CEO Alex Pourbaix said: “This is yet another example of Cenovus seizing opportunities to generate incremental value for shareholders.

“With Tucker and the other divestitures announced this year, we have delivered on our asset sales commitment for 2021, positioning the company well to focus on higher-return opportunities in the portfolio and continue increasing returns to shareholders.”

Last month, the Canadian firm agreed to divest its Husky retail fuels network and the Wembley assets in its conventional business in separate deals for total cash proceeds of about C$660m ($515.6m).

For the year 2022, Cenovus Energy plans to spend between C$2.6bn ($2bn) and C$3bn ($2.34bn) with an aim to produce nearly 800,000 barrels of oil equivalent per day.