Page 13 - NorthAmOil Week 45

NorthAmOil INVESTMENT NorthAmOil

Cenovus to sell Marten

Hills oil assets in Alberta

ALBERTA CENOVUS Energy announced this week that set to join the Headwater board of directors.
it had struck a deal to sell its Marten Hills oil Cenovus said that since its initial investment
assets in northern Alberta to Headwater Explo- in Marten Hills, it had always kept open the
ration for cash and common share equity con- option to either continue developing the asset or
sideration of around CAD100mn ($76mn) in to sell it. The company has now determined that
total. selling the asset will provide a “unique opportu-
This breaks down into CAD35mn ($27mn) nity” to accelerate value generated from Marten
in cash and 50mn common Headwater shares, Hills, particularly as it cuts back on explora-
plus 15mn share purchase warrants. Each war- tion and development spending in response to
rant will entitle the holder to acquire one Head- lower oil prices resulting from the coronavirus
water common share for a period of three years (COVID-19) pandemic.
following the completion of the transaction at an “This is a unique opportunity for us to part-
exercise price of CAD2 ($1.5) per share, Cenovus ner with a well-capitalised and highly respected
said in a November 9 statement. management team to accelerate development at
In addition, Headwater has agreed to a gross Marten Hills,” said Cenovus president and CEO,
overriding royalty (GORR) agreement that will Alex Pourbaix. “These are high-quality assets
give Cenovus the opportunity to benefit from that were unlikely to receive near-term funding
future development of the Clearwater formation from Cenovus, and we believe this transaction
at Marten Hills. Headwater has committed to will provide compelling value for Cenovus share-
spending at least CAD100mn on the acquired holders over the long term.”
acreage by the end of 2022. The transaction comes as Cenovus works to
The transaction is anticipated to close in complete its recently announced merger with
December 2020, and two Cenovus officials are Husky Energy in the first quarter of 2021.™

PERFORMANCE

Occidental posts larger-than-expected

loss, sets net-zero target

US OCCIDENTAL Petroleum has reported a net in a November 9 statement. “We continued to
loss of $3.8bn, or $4.07 per diluted share, for advance our divestiture programme, exceeding
the third quarter of 2020, down from a loss of our $2.0bn plus target for 2020, with additional
$912mn, or $1.08 per share, in the same quarter transactions anticipated as we continue our
of 2019. On an adjusted basis, the company’s loss deleveraging progress.”
amounted to $0.84 per share, while analysts had Occidental also said it had produced 1.24mn
expected a loss of $0.72 per share according to barrels of oil equivalent per day from continuing
Occidental has one of Refinitiv IBES data cited by Reuters. operations, exceeding the midpoint of its guidance
the largest footprints in The loss illustrates how the oil and gas indus- by 12,000 boepd despite a more active than expected
the Permian Basin. try continues to struggle in particularly chal- offshore storm season in the US Gulf of Mexico.
lenging market conditions. It was, however, an In another notable development, the com-
improvement on Occidental’s second quarter, pany has unveiled a net-zero greenhouse gas
for which it reported a net loss of $8.4bn, exacer- (GHG) emissions target for 2040 – also stating
bated by impairment charges of $6.6bn. that it would seek to reduce emissions from the
The company also sought to highlight other use of its products by customers to net zero by
aspects of its third-quarter performance. 2050. This makes Occidental the first major pro-
“We delivered improved operating cash flow ducer to target Scope 3 emissions – those from
in the third quarter and achieved the highest its customers. According to Bloomberg, those
quarterly free cash flow [FCF] since 2011, driven emissions account for about 80% of the total
by the strong performance of our businesses and emissions from a barrel of crude.
our laser focus on margin preservation, reflect- Occidental has one of the largest footprints in
ing our leadership as a low-cost operator,” said the Permian Basin, so its efforts will be watched
Occidental’s president and CEO, Vicki Hollub, with interest by rivals with similar ambitions.™

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