By Ethan Lou
| CALGARY, Alberta
CALGARY, Alberta Cenovus Energy Inc (CVE.TO) said on Tuesday it will replace Chief Executive Brian Ferguson, who championed an unpopular purchase of western Canadian oil sands assets, though it failed to name a successor, sending its shares tumbling 10 percent.The company said Ferguson will remain CEO until October while it searches for a new leader. He will then stay on in an advisory role until March 2018. The delay in naming a successor upset investors looking for quick change at the top of the company, whose stock has lost about half its value, wiping out nearly $7 billion, since March when it announced plans to buy the oil sands assets from ConocoPhillips. "The whole thing just smells bad,” said Norman Levine, managing director, Portfolio Management Corporation, which does not hold Cenovus shares. "It would be better if there was a clean goodbye."
The company also said on Tuesday it planned to sell C$4 billion to C$5 billion in noncore assets by the end of the year to reduce debt it took on to close the unpopular ConocoPhillips deal. It had previously said it would divest oil assets, including Pelican Lake and Suffield, that might be more than C$3.6 billion. Other assets the company may sell include part of the Deep Basin gas field it acquired from ConocoPhillips and Marten Hills. It is also looking to sell its Palliser and Weyburn projects in a deal that could be announced in the fourth quarter, Ferguson said at an investors' meeting in Toronto on Tuesday.
The ConocoPhillips deal effectively doubled Cenovus' assets, which the company said would allow it to achieve lower costs. That did not assuage investors who complained that its move into gas hurt the company's pristine balance sheet and diversified it too far from its core business of extracting crude from oil sands. Prior to Tuesday's announcement, some investors had called for a management shakeup.
"A change in management would probably provide a bigger boost to the share price than any positive surprise in terms of asset sale," Len Racioppo, managing director of Toronto-based Coerente Capital Management, said on Monday.A decline in oil prices, which hit seven-month lows on Tuesday [O/R], contributed to the drop in Cenovus shares as investors focused on its need for revenue to make debt payments, said Manash Goswami, a portfolio manager at First Asset Investment Management.Cenovus shares were down 10.7 percent at C$9.18 in Toronto on Tuesday morning. (Additional reporting by Yashaswini Swamynathan in Bengaluru, and; Fergal Smith and Solarina Ho in Toronto; Editing by Jim Finkle and Matthew Lewis)
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Updated Date: Jun 20, 2017 23:04:24 IST