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ConocoPhillips oil sands sale closes

US independent officially sells off 50% stake to Canada's Cenovus in $13bn deal

US independent ConocoPhillips has completed the sale of its 50% stake in the the Foster Creek Christina Lake project in Alberta to Cenovus, officially making the Canadian major the largest thermal oil sands producer.

The $13.2 billion sale includes ConocoPhillips' Christina Lake, Foster Creek, and Narrows Lake oil sands in situ operations in northern Alberta, as well as associated natural gas assets in the Deep basin of Alberta and British Columbia.

The deal doubles the integrated Canadian major's oil sands output to 356,000 barrels per day. The company will also hold a significant position in the Deep basin with more than 3 million net acres producing about 232,000 barrels of oil equivalent per day.

"With the completion of this transformational deal, we now have full control of our best-in-class oil sands projects and an exciting new growth platform in the Deep basin that provides us with significant short-cycle development opportunities to complement our long-term oil sands growth portfolio," Cenovus chief executive Brian Ferguson said.

ConocoPhillips is not completely out of the oil sands region: It still has an operated 50% interest in the Surmont oil sands joint venture.

After closing, Houston-based ConocoPhillips revised its second-quarter production guidance to between 1.7 million and 1.4 million boepd, reflecting the partial quarter impact of the divestiture.

"This transaction will make a significant and immediate impact by accelerating our value proposition," said ConocoPhillips chief executive Ryan Lance.

"We will achieve a step-function improvement in our balance sheet strength and the pace of our planned share repurchase program. Our focus on free cash flow generation and our clear allocation priorities put us in a strong position to deliver double-digit returns to shareholders through price cycles."

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