Cenovus boosts drilling plan for Conoco lands

CALGARY — Cenovus Energy (TSX:CVE) plans to ramp up the drilling of conventional gas wells on the lands it is buying from Houston-based ConocoPhillips in a $17.7-billion deal announced last month.

The Calgary-based company intends to spend $650 million in 2019 to drill about 120 wells in what is known as the Deep Basin of northeastern B.C. and northwestern Alberta, CEO Brian Ferguson said in an interview on Friday.

That’s about five times the $120 million ConocoPhillips had planned to spend this year to drill 24 wells, he said.

The drilling will bring on new production to better utilize ConocoPhillips’ gas processing plants and pipelines, Ferguson said, thus improving the economic return from the play.

“The infrastructure is 40 per cent utilized — that’s one of the big opportunities for us,” he said.

“Conoco has been starving the Deep Basin of capital; they had been allocating it elsewhere in the corporation.”

He said spending on the assets is expected to climb this year to $170 million and next year to $350 million.

Cenovus said production from the Deep Basin properties could grow by more than 40 per cent, from 120,000 barrels of oil equivalent per day in 2017 to about 170,000 boe/d in 2019.

Cenovus is also buying ConocoPhillips’s 50 per cent interest in the FCCL Partnership, an oilsands venture between the two companies in northern Alberta. The deal is expected to close by June 30.

The acquisitions will boost Cenovus’ production from 290,000 boe/d to 588,000 boe/d, with about 60 per cent of the total output coming from the oilsands.

ConocoPhillips has said it wanted to sell the Canadian assets to pay down debt and to allocate capital to other energy investments with better rates of return than oilsands and natural gas.

Ferguson believes the deal will provide cost-saving “operating synergies” for Cenovus, but said the effect on job numbers hasn’t yet been determined.

Cenovus said it has seen active interest from potential buyers of Alberta conventional oil and gas assets at Pelican Lake and Suffield it is trying to sell to help pay for the ConocoPhillips acquisition.

Just Posted

Relatives of murdered family critical of killers’ sentences

Open letter to sentencing judge criticizes ruling allowing killers to apply for parole in 25 years

City rolling out Green Carts

Green Carts used for organics, such as yard waste, food scraps and pet waste

New teaching standards applauded

New code of standards affecting teachers, principals and superintendents to kick in Sept. 1, 2019

UPDATED: Agriculture minister speaks to cattle producers

2018 Alberta Beef Industry Conference underway in Red Deer

Updated: Red Deer gets WHL Bantam Draft and Awards Banquet

WHL will holds its draft and awards ceremony in Red Deer for next three years

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Twenty years later, figure skating’s most famous backflip remains amazing (and illegal)

Figure skating involves spins, jumps, twizzles and a whole host of other… Continue reading

You don’t need to chop like a TV chef to get the job done

Standing in line at the emergency room, makeshift bandage around my finger,… Continue reading

Seychelles swaps debt for groundbreaking marine protection

CURIEUSE ISLAND, Seychelles — With deep blue waters, white sand beaches and… Continue reading

Trump endorses raising minimum age to 21 for more weapons

WASHINGTON — President Donald Trump endorsed stricter gun-control measures Thursday, including raising… Continue reading

Red Deer blood clinic in need of 600 donors

Aunt encourages Central Albertans to donate blood after losing nephew

Court considers banning diesel cars in German cities

BERLIN — A German court began considering Thursday whether authorities should ban… Continue reading

US women beat Canada in Olympic hockey; Gisin tops Shiffrin

PYEONGCHANG, Korea, Republic Of — A tense shootout, a dazzling deke and… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month