Canadian Natural Likely To Acquire Cenovus' Pelican Assets

Per Bloomberg, oil producer Canadian Natural Resources Limited (TO:CNQ) might be the one to acquire Cenovus Energy Inc.'s (TO:CVE) asset in Pelican Lake, Alberta, Canada. Canadian Natural will pay C$1 billion ($807 million) for the property.

Canadian Natural and Cona Resources Ltd. were among the major bidders for the oil project in Northern Alberta near Fort McMurray. The asset in focus uses polymer flooding technology to increase oil recovery. The technology helps Cenovus to mix water and polymer, which is used to extract oil efficiently.

The company is divesting Pelican Lake properties to reduce its debt related to the C$16.8 billion acquisition of Foster Creek Christina Lake assets from ConocoPhillips (NYSE:COP) in May 2017.

Asset Details

Cenovus' wholly owned Pelican Lake property is approximately 300 kilometers north of Edmonton. Production of heavy oil in the asset began in 1997 through horizontal wells. The polymers boost the production process and increase efficiency without causing damage to the environment.

Oil production from the Pelican Lake assets at present is 20,100 barrels per day. Operating cost in the world class property is below $12 per barrel.

Importance of the Deal to Canadian Natural

The Canadian oil exploration and production company has its crude oil producing property near the oil project of Cenovus in Pelican Lake. The company has experience in operating heavy oil and polymer based property. Hence, the deal will provide Canadian Natural a strategic advantage and an edge over competitors.

Canadian Natural also aims to focus on creating a diversified portfolio of light, primary heavy, Pelican Lake oil and natural gas liquids. Should the Pelican Lake deal go through, it will be Canadian Natural’s second domestic acquisition this year after the buyout of the Athabasca oil sands from energy major Marathon Oil Corporation (NYSE:MRO) .

About Canadian Natural and Zacks Rank

Canadian Natural is an independent oil and natural gas exploration, development and production company based in Calgary, Alberta. Its operations are focused in Western Canada, the North Sea and Offshore West Africa.

Canadian Natural’s 2017 sales are expected to increase 48.2% year over year. The company delivered a positive earnings surprise of 22.2% in fiscal third-quarter 2017.

The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

Canadian Natural has lost 2% of its value year to date compared with the 10.8% fall of its industry.

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