Sources say that Cenovus is considering selling assets in Alberta worth around C$3 Billion.

Two sources with knowledge of the matter have confirmed that Canadian oil producer Cenovus is looking to sell conventional oil and natural gas assets in Alberta's Deep Basin as it "looks" to reduce debt following the recent acquisition of MEG Energy, an oil sands competitor.

Sources said that Cenovus has contacted potential buyers to gauge interest. The assets could be worth around C$3 Billion ($2,17 Billion), according to the sources. Cenovus may decide to keep the assets if the plans do not work out.

Sources requested anonymity in order to discuss sensitive details. Cenovus didn't immediately respond to an inquiry for comment.

The Deep Basin, which straddles Alberta and British Columbia is a conventional formation that's heavy on natural gas, located northeast of the Rocky Mountain belt. The term conventional oil and gas assets is used to describe well-established mature fields which do not require sophisticated drilling technology but have a steadily decreasing output.

Cenovus is considering selling its Deep Basin assets as it focuses on its oil?sands core business. In November, it completed a C$8.5billion acquisition of MEG Energy and added the highly coveted Christina Lake?project from its smaller rival after a bitter battle to takeover Adam Waterous' Strathcona Resource.

Last month, the company announced that it would invest C$3.6 billion in its oil sands operations this year. This is up from C$2.8 billion in the budget for 2025. The conventional business, including the Deep Basin assets was allocated capital of up to C$500 millions for 2026. This is a significant increase from the C$400million that it received last year.

Cenovus' balance sheet would be cleaned up if it sold the Deep Basin assets. The Calgary-headquartered company's net debt jumped to around C$10.7 billion after the MEG Energy takeover ?as it assumed about C$800 million of MEG's debt and took out a C$2.7 billion loan to fund the deal, according to Morningstar ?DBRS estimates.

Cenovus promised investors that it would reduce its net debt to?C$4 Billion over time. The sale of Deep Basin assets may help the company reach its target.

Cenovus forecast last month that production from conventional assets will average 125,000 barrels equivalent per day by 2026.

Cenovus has conventional assets in Canada's Montney, Rainbow Lake and Deep Basin regions.

(source: Reuters)