ConocoPhillips (COP) Plans to Divest Stake in Cenovus Energy

A generic image of a pen on top of a stock chart.
Credit: Shutterstock photo

Per sources, ConocoPhillipsCOP is expected to divest its stake in Cenovus Energy Inc CVE . The company had obtained the stake as part of an asset sale to the Canadian oil and gas producer in 2017.The companies declined to comment on any developments related to the divestiture.

In 2017, Cenovus Energy had purchased oil sands and natural gas assets from ConocoPhillips for C$17 billion. ConocoPhillips received the payment in the form of 208 million shares of Cenovus as well as C$14.1 billion. This made ConocoPhillips the biggest investor in Cenovus Energy. However, the company had stated that it did not plan to remain a long-term holder of Cenovus Energy's equity.

ConocoPhillips had valued the stake at $9.41 per share, based on Cenovus Energy's New York-listed stock at the time of the deal in 2017. Since the transaction closed on May 17, 2017, Cenovus Energy's price has fluctuated widely, although it has consistently traded higher since April 25. The company's shares have been treading north of late, courtesy of an oil price rebound and are up 24% in the last three months.

ConocoPhillips has held talks with investment banks relating to selection of advisors for the sale and might offer the shares to institutional investors. The sale is projected be completed in this month. However, the specific timing will depend on market conditions. If the sale is not concluded by ConocoPhillips in June or early July, it will then be carried out around September.

Based on Cenovus Energy's current share price, ConocoPhillips' stake is valued at about C$2.6 billion ($2 billion) and the sale is likely to happen at a small discount. The transaction will be one of the biggest Canadian equity share sales in 2018.

Over the past two years, ConocoPhillips has been aggressively selling assets and cutting costs to lower debt and boost dividend. In 2017, the company divested assets worth $17 billion.

The deal is similar to the overnight stock sale by Royal Dutch Shell Plc RDS.A in May, where it sold its entire stake in Canadian Natural Resources Ltd CNQ for $3.3 billion. The overnight trades are usually discounted from current price levels to entice investors. In order to make the sale useful, ConocoPhillips will need Cenovus Energy's value at a position where it is making profit even after the discount.

ConocoPhillips has returned much of the proceeds it has raised recently to shareholders. The company hiked its dividend by 8% in the first quarter to 28 cents and intends to buy back $2 billion in shares in 2018.

Price Performance

In the past three months, ConocoPhillips' shares have gained 25.7% compared with the industry 's 23.9% growth.

Zacks Rank & Key Picks

ConocoPhillips currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here .

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Canadian Natural Resources Limited (CNQ): Free Stock Analysis Report

Cenovus Energy Inc (CVE): Free Stock Analysis Report

Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report

ConocoPhillips (COP): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at

Learn More