ConocoPhillips latest to offload its Canadian oil sands assets, following similar recent moves by Royal Dutch Shell and Marathon Oil

US group ConocoPhillips (NYSE:COP) has become the latest oil major to offload its Canadian oil sands assets, following on from recent similar moves by Royal Dutch Shell PLC (LON: RDSA) and Marathon Oil Corp (NYSE:MRO).

ConocoPhillips said it has agreed to sell oil sands and western Canadian natural gas assets to Toronto-listed Cenovus Energy Inc (NYSE:CVE) (TOR:CVE) for C$17.7 bn (US$13.3 bn).

For Calgary-based Cenovus, one of Canada’s largest producers, the deal doubles its production to 588,000 barrels of oil equivalent per day as it takes full ownership of its main oil sands assets in northern Alberta

ConocoPhillips is selling its 50% interest in the Foster Creek Christina Lake oil sands partnership, which Cenovus already operates, as well as the majority of its western Canada Deep Basin conventional gas assets.

The US oil firm will retain its 50% interest in the Surmont oil sands project, a joint venture with Total E&P Canada, and its liquids-rich Blueberry-Montney shale assets.

The surprise disposal, the largest in ConocoPhillips’s history, comes with the company under pressure to cut its debt burden.

In reaction,  ConocoPhillips’s shares jumped over 7% higher to US$49.36 in pre-market trading in New York.

Cenovus shares, also listed in New York, dropped by over 8% to US$11.97.

Canada’s oil sands hold the world’s third-largest crude reserves but also carry some of the highest operating costs globally, and are struggling to compete with cheaper US shale plays in a $50-a-barrel oil price environment.

Story by ProactiveInvestors