Cenovus investors remain jittery sending company stock to a new low
Cenovus CEO Brian Ferguson confirmed this week his company has already secured 75% of the financing required for its recent acquisition of oil sands and conventional assets from ConocoPhillips.
Ferguson says there is strong interest in the company's Pelican Lake and Suffield conventional oil and natural gas assets, which are currently up for sale. Interested parties include pension funds, investment firms and smaller oil & gas companies. The CEO also promised to do more hedging of its future oil production, to help ensure a floor price for its bitumen sales.
Despite the positive tone, Cenovus stock has been under severe pressure, falling almost 20% since the deal was announced, despite an increase in oil prices. Cenovus shares (TSX:CVE) are now back to the lows of early 2016, when oil prices were trading closer to US$30 a barrel.
Ferguson insists the "strategic rationale" is well understood by the company's investors. In contrast, ConocoPhillips shares (NYSE:COP) are up almost 10% since the announcement.
The $17.7 billion deal will be financed through the issuance of more Cenovus shares, senior notes and a short-term bridge loan of $3.6 billion to be repaid pending the sale of the Pelican Lake and Suffield properties.