CALGARY — Cenovus Energy Inc. has officially opened its doors to potential partners to help develop some of its Alberta oilsands properties, and already interest is flowing in from around the globe.
The companies wanting to take part in the competitive bidding process include ones based in Beijing, Mumbai, Houston, London and Calgary, chief executive Brian Ferguson said Thursday after the company reported profits nearly doubled and revenues jumped by a third.
“We thought it should be attractive to virtually every large oil and gas company that was interested in Canadian oilsands,” he said in an interview.
Calgary-based Cenovus (TSX:CVE) is marketing two land packages under separate processes, one at Borealis, and one at Leismer. Interest has been expressed in other properties, but Cenovus is limiting partnerships to those two.
“Cenovus will always have a significant component of 100-per-cent-owned properties. I just think that’s good portfolio management on our part,” said Ferguson.
Ferguson had said previously Cenovus aimed to have something to announce on this front by year-end. On a conference call with analysts Thursday, he said he won’t hold himself to that schedule at the expense of finding the best possible transaction.
“So if it takes us a few extra weeks, then we’ll certainly take that time to make sure that we get it right,” he said.
He also didn’t want to limit the types of transaction that may emerge by divulging a preference on the conference call. It could be a joint-venture, farm-out, swap or something else entirely.
“We are very much keeping an open mind and don’t in any way want to stifle any creativity by those folks who are in the data room.”
Cenovus is no stranger to partnerships; its Foster Creek, Christina Lake and Narrows Lake oilsands projects are part of a 50-50 joint venture with Houston-based energy giant ConocoPhillips, which ties Cenovus production to two of the U.S. company’s (NYSE:COP) refineries.
This summer, ConocoPhillips announced it would split itself up into two separate companies: one focused on refining and marketing, the other on exploration and production.
Cenovus itself is the product of a corporate breakup, albeit along much different lines. Encana Corp. (TSX:CVE) decided to focus exclusively on natural gas, spinning off its oil assets into Cenovus in late 2009.
The ConocoPhillips split shouldn’t affect the Cenovus partnership, since the upstream and downstream aspects were handled by two different teams to begin with.
Cenovus also said Thursday it is increasing the amount of capital it plans to spend in 2011 as it speeds up expansions to its oilsands operations at Foster Creek and Christina Lake.
In July, Cenovus said it planned to spend between $750 million and $850 million combined at its flagship projects this year
In its updated guidance released Thursday as part of its quarterly earnings report, it said it now plans to spend a combined $865 million to $885 million there.
“The additional 2011 spending will keep all of our field crews working steadily and allow them to focus on safe and efficient operations,” said chief operating officer John Brannan on the conference call.
Christina Lake Phase C began producing oil during the third quarter, ahead of schedule and under budget. Work also progressed on Phase F of Foster Creek, and on two new phases of Christina Lake, D and E.
Because of the scale of its operations, Cenovus can justify running its own module yard near Edmonton to put together equipment for each oilsands phase. Handling those task in-house, rather than contracting it out, gives the company much more control over cost, quality and schedule, Ferguson said.
As well, Cenovus has the benefit of having built eight oilsands phases already.
“One of the most important assets we have you won’t find on our balance sheet, that’s our track record,” Ferguson said in the interview. “The more often you do something, the better you get at it.”
Earlier Thursday, Cenovus said its net profits nearly doubled to $510 million from $295 million as output rose and the company booked a big hedging gain.
Earnings per share jumped to 67 cents in the third quarter ended Sept. 30, up from 39 cents last year.
Operating earnings, which remove the effects of one-time items, were $303 million, compared to $156 million. On a per-share basis, that translated to 40 cents per share, missing the average analyst expectation of 52 cents per share, according to Thomson Reuters.
Three-month revenues after royalties jumped to $3.86 billion from $2.96 billion.
Meanwhile, cash flow rose 56 per cent to $793 million from $509 million as the company benefited from higher oil prices and improved refining results.
Output at Foster Creek and Christina Lake oilsands projects was more than 66,000 barrels a day.
Cenovus shares gained 18 cents to $36.39 in afternoon trading on the Toronto Stock Exchange.