Tuesday, February 22, 2011

After Encana's JV for shale gas, now Cenovus looks for JV partners to develop its oil sands resources

Cenovus, which was split from Encana in December 2009, would be following its predecessor that has formed joint ventures with Petro-China, CNPC and Korea Gas to develop unconventional resources. 
Cenovus Energy Inc is currently seeking a joint-venture partner to speed development of its Alberta oil sands holdings and boost the value of its reserves.

Cenovus’ oilsands projects overview:
-- Core oilsands projects: Foster Creek, Christina Lake and Pelican Lake; Cenovus holds approximately 800,000 net acres of existing bitumen leases within the Athabasca and Cold Lake areas and has additional 652,000 net acres on the Cold Lake Air Weapons Range.
-- Combined production of Foster Creek, Christina Lake and Pelican Lake was 82,527 BO/d net to Cenovus in Q4-2010.
-- Foster Creek in 2011F: $350 - 400 million of capital; 2.1-2.3 SOR; $11.10-11.85/bbl operating cost; 110-120 gross strat wells; Phases F, G and H construction ramp up; Expects production of 56,000 BO/d in later 2011.
-- Christina Lake in 2011F: $350-400 million of capital; 2.4-2.7 SOR; $18.65-19.40/bbl operating costs; 50-60 strat wells; Continue construction on Phase C and D; Expects net production of 16,000 BO/d in later 2011.

-- Pelican Lake: $175-200 million of capital; $14-15/bbl operating cost; 40-45 gross strat wells; Start drilling infill patterns; Potentially accelerate drilling program.
-- As of December 31, 2010, Proved bitumen reserves - 1,154 MMBO; Proved plus Probable bitumen reserves - 1,677 MMBO.
-- The increase in reserves is mainly attributed to the approved expansion of the Foster Creek development area and increased recovery due to advancements in technology, such as wedge wells, and improved reservoir performance.
-- In addition to the expanded reserves numbers, there was a significant increase to the company’s bitumen economic contingent resources in 2010, mainly attributed to the assessment data collected from stratigraphic (strat) wells. Best estimate bitumen economic contingent resources at year-end 2010 were 6.1 billion bbls, a 13% increase over 2009.
-- On a gross basis, about 260 of the assessment wells were drilled at the company’s oil sands properties in 2010 and an additional 450 strat wells are expected to be completed in 2011.
-- In addition, Cenovus has identified 10 other oilsands projects - Narrows Lake, Grand Rapids in the Greater Pelican region and Telephone Lake project in the Borealis region for future development.


  1. CEO Brian Ferguson said the company is actively looking for swap, joint-venture, farm-out and divestiture opportunities for some of its properties.


  2. BMI View: We expect strong interest from Chinese and other Asian state-run companies for both Cenovus' Oil Sands project and Nexen's unconventional gas project Canada's oil and gas sector increasingly looks east.

  3. Chinese interest in Canadian Oil and gas industry is growing.

    The Chinese may also be interested in building a pipeline from Alberta to British Columbia’s Pacific coast that will supply crude to China from Canada’s oil sands.

    The proposed Gateway pipeline is designed to ship about 400,000 barrels per day of crude from Alberta’s oil sands to Asian markets.



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