ConocoPhillips, the Houston-based oil company, announced this Tuesday its plans to sell its stake in Canadian corporation Cenovus Energy, amid a buyback shares strategy for debt reduction.
Firstly, the company acquired approximately a 10% stake in Cenovus Energy, after Cenovus bought from ConocoPhillips assets in the Foster Creek Christina Lake oil sands, and also in the Canada Deep Basin, back in 2017.
Secondly, Cenovus paid $17.7 billion in that deal; including $14.1 billion in cash and 208 million shares. While, ConocoPhillips acquired its mentioned 10% stake. However, the U.S. company now intends to sell its Cenovus shares in the open market, in the beginning of the second quarter of this year.
Thirdly, according to the company’s 2021 1Q financial report, the proceeds from the sale would allow the company to rebuy its own shares; in a strategy to reduce its gross debt by $5 billion over the next five years.
Moreover, the current value of than 10% stake in Cenovus is valued at about $2 billion, ay current prices. After the announcement, company’s shares were up as much as 2,4%, in the early trading session.
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ConocoPhillips with strong 1Q performance
In addition, ConocoPhillips became the first independent oil producer to resume its buyback strategy, worth at $1,5 billion a year, back in March, after crude oil prices rose from their historic 2020 plunge.
On the other hand, the company reported 1Q earnings of $1.0 billion, or $0.75 per share, compared with a first-quarter 2020 loss of $1.7 billion, or ($1.60) per share. Some special items for the current quarter included an unrealized gain on Cenovus Energy shares.
Furthermore, some highlights from the current quarter, were the completion of the Concho acquisition, which enhanced both the company’s asset portfolio and it financial framework. Also, cash from operations of around $2.1 billion; which exceed the company’s capital expenditures and created for it a cash flow of $0,9 billion.
In addition, Ryan Lance, ConocoPhillips CEO, said. “The first quarter was a momentous one for ConocoPhillips; with the closing of the Concho transaction, the better-than-expected pace and progress of integration activities companywide; as well as the safe response to Winter Storm Uri.”
Finally, he remarked. “Our entire organization is focused on improving every aspect of our underlying business to make us the most competitive company in the industry; increasing capital efficiency, generating free cash flow; also, strengthening our balance sheet, consistently delivering peer-leading return of capital to our owners and lowering emissions.”