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CALGARY - Cenovus Energy Inc. (TSX:CVE) (NYSE:CVE), a prominent player in the Oil, Gas & Consumable Fuels industry with a market capitalization of $28.8 billion, announced Tuesday an agreement to sell its 50% interest in WRB Refining LP to joint venture partner Phillips 66 for US$1.4 billion in cash, approximately C$1.9 billion, subject to customary closing adjustments. According to InvestingPro analysis, the company currently trades below its Fair Value, presenting a potential opportunity for investors.
The transaction, expected to close around the end of the third quarter, involves the Wood River Refinery in Illinois and Borger Refinery in Texas, which have a combined crude throughput capacity of 495,000 barrels per day, with 247,500 barrels per day attributable to Cenovus. With an EBITDA of $6.2 billion in the last twelve months and operating with a moderate debt level, the company maintains strong financial flexibility for such strategic moves.
"This transaction aligns with our strategy of owning and operating the assets that are core to our business," said Jon McKenzie, Cenovus President & Chief Executive Officer, in the press release statement. "After the sale of WRB, our downstream business will be more focused, comprised of assets we control."
Following the divestiture, Cenovus’s downstream operations will consist of the Lloydminster Upgrader, Lloydminster Refinery, Lima Refinery, Toledo Refinery and Superior Refinery, with a total crude throughput capacity of 472,800 barrels per day.
The company plans to use proceeds from the transaction to reduce net debt and accelerate shareholder returns through increased share repurchases. Cenovus reported it had already purchased approximately 18.8 million common shares for $388 million in the third quarter up to the end of August, at an average price of about $20.59 per share.
The transaction remains subject to the satisfaction of customary closing conditions.
In other recent news, Cenovus Energy reported impressive second-quarter earnings for 2025, significantly exceeding analyst expectations. The company’s earnings per share reached $0.33, far surpassing the projected $0.09, marking a 276.2% surprise. Additionally, revenue came in at $10.51 billion, which was notably higher than the anticipated $8.68 billion, representing a 21.08% surprise. In a strategic move, Cenovus announced a definitive agreement to acquire MEG Energy in a $7.9 billion cash-stock deal, including assumed debt. Under this agreement, MEG shareholders will receive $27.25 per share, with the option of cash or Cenovus shares, subject to pro-ration. Furthermore, TD Cowen has reiterated its Buy rating for Cenovus Energy, maintaining a price target of C$27.00. The firm highlighted that Cenovus’s recent financial results have addressed investor concerns, reinforcing its standing as a leading choice in the energy sector. These developments mark significant progress for Cenovus Energy in recent times.
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