Cenovus Energy is preparing to sell assets in Alberta for 3 billion dollars

Canadian oil producer Cenovus Energy is exploring the sale of its conventional oil and gas assets in the Deep Basin region of Alberta. This move is part of the company's effort to reduce debt following its recent acquisition of oil sands competitor MEG Energy. Two sources familiar with the matter told Reuters.

According to the sources, Cenovus has been reaching out to potential buyers in recent weeks to gauge their interest in acquiring these assets. The potential deal could be worth around 3 billion Canadian dollars ($2.17 billion USD). However, the sources noted that discussions are still in early stages, and the company may ultimately decide to keep the assets. Cenovus representatives have not yet commented on the matter.

About the Field

Deep Basin is a conventional natural gas field that spans across Alberta and British Columbia. The field is located northeast of the Rocky Mountain belt. Conventional hydrocarbon assets are typically characterized as well-developed mature fields that don't require complex drilling technologies, but experience gradually declining production volumes.

Company's Strategic Priorities

The potential sale of Deep Basin assets comes as Cenovus increases its focus on its core business — oil sands production. In November, the company completed its $8.5 billion Canadian dollar acquisition of MEG Energy, adding the highly valued Christina Lake project to its portfolio after a competitive bidding war with Adam Waterous's Strathcona Resources.

Last month, the company announced plans to invest up to 3.6 billion Canadian dollars in oil sands operations this year, up from 2.8 billion Canadian dollars in 2025. Meanwhile, its conventional business, which includes Deep Basin assets, has been allocated up to 500 million Canadian dollars for 2026, compared to 400 million Canadian dollars the previous year.

Financial Considerations

Selling the Deep Basin assets could help improve the company's financial position. After acquiring MEG Energy, Calgary-based Cenovus's net debt increased to approximately 10.7 billion Canadian dollars. This resulted from taking on about 800 million Canadian dollars of MEG's debt and securing a 2.7 billion Canadian dollar loan to finance the deal, according to Morningstar DBRS estimates.

Cenovus management has assured investors of its intention to eventually reduce net debt to 4 billion Canadian dollars. Selling the Deep Basin assets could significantly help the company reach this goal.

According to Cenovus's forecast from last month, average production from conventional assets in 2026 will be up to 125,000 barrels of oil equivalent per day. Besides Deep Basin, the company's conventional assets include holdings in the Montney and Rainbow Lake regions of Canada.