Cenovus reportedly considering sale of Alberta conventional assets

Canada’s Cenovus Energy is reportedly considering a sale of conventional oil and gas assets in Alberta’s Deep Basin. Citing two sources familiar with the matter on January 21, Reuters reported that the sale was being considered as the company seeks pay down debt following its recent takeover of MEG Energy.

According to the sources, Cenovus has contacted potential buyers in recent weeks in an effort to gauge interest in the assets, which they said could fetch around CAD3bn ($2.17bn). They added, however, that the plans were still at an early stage and that Cenovus could ultimately decide to hold onto the assets.

This comes as Cenovus sharpens its focus on its oil sands assets – already a significant part of its operations. The company expanded its oil sands holdings via its acquisition of MEG, which was worth more than CAD8.6bn ($6.2bn) in cash, shares and assumed MEG debt and closed in November. The main draw of the MEG acquisition was its Christina Lake project, adjacent to Cenovus’ own Christina Lake assets. The transaction added roughly 110,000 bpd of low-cost, long-life oil sands production to Cenovus.

In its 2026 capital budget, unveiled in December, Cenovus said it would spend CAD3.5-3.6bn ($2.5-2.6bn) on its oil sands business next year. This represents an increase from CAD2.7-28bn ($1.95-2.0bn) allocated to the oil sands in the company’s 2025 capital budget a year prior. By contrast, Cenovus has only allocated CAD450-500mn ($326-362mn) to its conventional oil and gas operations in 2026, up from targeted spending of CAD350-400mn ($253-289mn) in 2025.

Cenovus anticipates producing 120,000-125,000 barrels of oil equivalent per day (boepd) from its conventional assets in 2026, down from a targeted 125,000-135,000 boepd in 2025. Meanwhile, the company anticipates an increase from a targeted 615,000-635,000 barrels per day (bpd) of oil sands production in 2025 to a range of 755,000-780,000 bpd in 2026.

According to Morningstar DBRS estimates cited by Reuters, Cenovus’ net debt has risen to around CAD10.7bn ($7.7bn) after it assumed about CAD800mn ($579mn) of MEG's debt and took out a CAD2.7bn ($1.95bn) loan to fund that acquisition.

The company is targeting the reduction of its debt to CAD4bn ($2.9bn) over time and selling its Deep Basin assets would take it a step closer to achieving this goal.