Quaker Mile: Seller sells stake in Canadian oil sands project

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The Canadian oil giant Cenovus has agreed to sell its contribution to the Alberta oil sands project Tucker for C$1.3bn (£825m), it has announced.

The move comes as Cenovus is seeking to raise $1.9bn to bridge a funding gap following its acquisition of ConocoPhillips’ Canadian assets in 2016.

Cenovus said the sale to the Industrial Alliance Insurance Company of Canada would help it avoid a credit downgrade.

Meanwhile, rival Suncor has also emerged as a potential buyer for Tucker.

Majority-owned by Royal Dutch Shell, the Tucker project is the biggest undeveloped oil sands resource in the province.

The oil sands sector is heavily criticised for its greenhouse gas emissions, with others warning of its impact on the environment and the oil and gas industry, as well as on local communities.

However, the company said that moving forward with Tucker would continue to mitigate its climate impact, adding that it would be “a great asset” for other operators in the area.

Cenovus said Tucker has 89 wells, a 90-day plant start-up and estimated annual production of 34,000 barrels of oil equivalent per day.

It estimates that the sale will generate a cash tax of approximately C$400m, net of any proceeds from remaining future sales.

The company will use this cash to pay down debt and for general corporate purposes.

No, I mean, that I A shot that I posted #cenovusenergy company pic.twitter.com/QIPaoNspHj — Greg Jenkins (@GregGRienn) September 28, 2018

Qatar gets it in the neck

Meanwhile, Canada’s independent oil producer Cenovus, once a regional rival to ExxonMobil and Royal Dutch Shell, said it was considering divesting its holdings in the Lower Athabasca Oil Sands in northern Alberta.

Its shares were down by as much as 4% as the company released its second-quarter results, which were largely in line with expectations.

Net income fell to $123m from $972m, largely due to a writedown of its interest in Tucker and an extraordinary charge, not related to Tucker, for $218m.

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