HRP operates a portfolio of oil and gas royalties in Manitoba, Saskatchewan and Alberta, Canada.
The company holds approximately 4.8 million gross acres of royalty interest and mineral fee title lands, and gross overriding royalties on 0.5 million acres at two large-scale oil projects in the country.
As part of the deal, Cenovus will have an option to take on lease more than 800,000 acres in zones of the fee lands at pre-determined rates for up to ten years, to facilitate growth of its conventional oil and gas business.
Cenovus president and CEO Brian Ferguson said: "The proceeds from this sale will strengthen our balance sheet and provide us with greater resilience during these uncertain times as well as the flexibility to invest in organic projects with strong returns."
The company has considered several options for HRP, including a potential initial public offering to maximize value to its shareholders.
"We believe this transaction will realize value that isn’t currently reflected in our share price," Ferguson added.
Subject to regulatory approvals, the Teachers’ Natural Resources Group (NRG)-led transaction is likely to be completed by the end of this month.
Image: Cenovus Energy plans to focus on its conventional oil and gas business. Photo: courtesy of Cenovus Energy Inc.
