Canadian oil and gas company NuVista Energy has agreed to acquire the Pipestone and Wembley natural gas and liquids business of Cenovus Energy located in the Pipestone area of Northwest Alberta in Canada, for C$625m ($478.8m).
Image: Map of existing and acquisition properties of NuVista Energy. Photo: courtesy of NuVista Energy Ltd.
The assets held by Cenovus Pipestone Partnership that are involved in the deal are located mainly in the premium core of the condensate-rich Alberta Triassic Montney fairway and in close proximity to the existing Pipestone assets of NuVista Energy. They are spread over 35,250 net acres of land comprising four layers of Montney development.
The Canadian firm will be increasing its existing Montney land position by 29% through the acquisition, which brings with it 9,600 Boe/d of production and associated infrastructure.
Also part of the transaction is Cenovus Pipestone’ stake of 39% in the area gathering and compression system and the Wembley Gas Plant.
NuVista Energy said that the acquisition will considerably add to its core of the top condensate-rich lands in the Pipestone area.
Based on its development plans, the company said that the transaction helps it increase its line of sight for future full-field development production to more than 110,000 Boe/d, with an increased condensate gas ratio (CGR) that will lead to improved margins and free adjusted funds flow generation.
NuVista Energy, in a statement, said: “The Acquisition further enhances NuVista’s ability to deliver industry-leading profitable growth and returns. When they reach full field development, we target the Acquired Business to add over 50,000 Boe/d of production to NuVista.
“When combined with NuVista’s existing assets, future full-field development production is targeted to increase to over 110,000 Boe/d. The condensate weighting of full-field development production also increases from approximately 30% to 32+%.”
Cenovus Energy said that like its previous divestitures, the proceeds from the current sale will be used to deleverage its balance sheet further.
Cenovus Energy president & CEO Alex Pourbaix said: “I’m pleased with this important step towards streamlining and rationalizing our acreage in the Deep Basin.
“These are high quality assets and we believe the Pipestone transaction will provide compelling value for Cenovus shareholders.”
The transaction is anticipated to be completed in the third quarter of 2018, after satisfying customary closing conditions.