June 4, 2018, bu John Tilak, David French and Ernest Scheyder
(Reuters) – ConocoPhillips (COP.N) is preparing to offload its stake in Cenovus Energy Inc (CVE.TO) that it acquired as part of an asset sale to the Canadian oil and gas producer last year, people familiar with the matter told Reuters.
The U.S. energy company has held discussions with investment banks about appointing advisors to the sale and could offer the shares to institutional investors as early as this month, said the people. They cautioned that the precise timing would depend on market conditions and could change.
If ConocoPhillips does not complete the sale in June or early July, it would then likely wait until September when institutional investors will have returned from their summer vacations, they added.
The ConocoPhillips stake in Cenovus is worth C$2.6 billion ($2 billion) based on its current share price but it would likely be sold at a small discount, the sources said. It would still be one of the biggest Canadian equity share sales this year.
ConocoPhillips has been actively selling assets and cutting costs in the past two years in order to cull debt and boost its dividend. Since the first quarter of 2016, the Houston-based company has cut its debt load by 42 percent to $17.04 billion.
When Cenovus acquired oil sands and natural gas assets from ConocoPhillips for C$17 billion last year, it took 208 million shares of Cenovus, as well as C$14.1 billion of cash.
The deal made ConocoPhillips the biggest investor in the Calgary, Alberta-based company, although the U.S. oil giant has said it would not be a long-term holder of Cenovus equity.
ConocoPhillips and Cenovus declined to comment. The sources declined to be identified as the information is not public.
Shares of Cenovus extended their losses, to fall as much as 8.3 percent after the Reuters report. They were trading down 7.8 percent at C$13.39 on Monday afternoon trading. The broader Canadian energy index was down 2.8 percent.
Cenovus shares have had a wild ride since the acquisition, declining as investors punished the stock over the deal, which was regarded as significantly stretching the Canadian firm’s finances.
While still down 29 percent since the deal was announced, they have been bouncing back of late on the back of an oil price rebound. The stock is up 20 percent in the last three months.
U.S. crude oil prices CLc1 are up 7.3 percent since the start of the year.
The move by ConocoPhillips follows a similar overnight stock sale by Royal Dutch Shell Plc (RDSa.L), which last month sold its entire stake in Canadian Natural Resources Ltd (CNQ.TO) for $3.3 billion.
Reporting by John Tilak in Toronto, David French in New York and Ernest Scheyder in Houston; Additional reporting by Rod Nickel in Winnipeg; Editing by Denny Thomas and Chizu Nomiyama