Conoco Deal Lifts Cenovus to Profit
Shares of oil producer Cenovus Energy Inc surged more than 6 percent on Thursday after the company reported a second-quarter profit, compared with a year-ago loss, helped by its purchase of ConocoPhillips (COP)' Canadian oil sands assets.
Cenovus, which paid $13.3 billion in March to buy the assets, said the purchase boosted total production by 65 percent to 436,929 barrels of oil equivalent per day in the quarter. The deal closed on May 17.
ConocoPhillips sold its 50 percent interest in the Foster Creek Christina Lake oil sands partnership, as well as the majority of its western Canada Deep Basin conventional gas assets.
"With 45 days of contribution from the acquired assets, the company increased adjusted funds flow by 80 percent, free funds flow by 128 percent," Cenovus said in a statement.
Cenovus shares were up 6.1 percent at C$10.56 in early trading, while the benchmark Toronto stock index was up 0.3 percent.
Cenovus' revenue climbed to C$4.04 billion in the second quarter ended June 30, from C$2.75 billion a year earlier.
The Calgary-based oil producer, which is searching for a new CEO to replace Brian Ferguson, reported a net profit of C$2.64 billion ($2.1 billion), or C$2.37 per share in the quarter, compared with a loss of C$267 million or 5 Canadian cents per share, a year earlier.
Despite Thursday's rally, Cenovus shares have lost more than 40 percent of their value after investors rejected Ferguson's rationale to buy the Conoco assets, at a time when global crude prices remain weak and international energy firms are exiting the region.
Reporting by Yashaswini Swamynathan and Ethan Lou