Calgary

Headwater Exploration signs $100M deal to buy Cenovus's Marten Hills assets

Headwater Exploration Inc. has signed a deal with Cenovus Energy Inc. to buy Cenovus's assets in the Marten Hills area of northern Alberta for approximately $100 million in cash and stock.

Headwater will acquire 2,800 barrels per day of medium oil production under deal, company says

Cenovus chief executive Alex Pourbaix called it a unique opportunity to partner with a respected management team to accelerate development at Marten Hills. (Jeff McIntosh/The Canadian Press)

Headwater Exploration Inc. has signed a deal with Cenovus Energy Inc. to buy Cenovus's assets in the Marten Hills area of northern Alberta for approximately $100 million in cash and stock.

Under the deal, Headwater says it will acquire 2,800 barrels per day of medium oil production and 270 net sections of rights in the Clearwater formation.

The company has agreed to pay $35 million in cash and issue 50 million common shares of Headwater and 15 million purchase warrants exercisable at $2.00 per common share with a three-year term.

Cenovus will own a 26 per cent stake in Headwater and will be entitled to appoint two nominees to the board of directors.

Headwater has also given Cenovus the ability to participate in Headwater's future equity financings based on its pro rata ownership level as long as Cenovus holds at least a 20 per cent stake in the company.

Cenovus chief executive Alex Pourbaix called it a unique opportunity to partner with a respected management team to accelerate development at Marten Hills.

"These are high-quality assets that were unlikely to receive near-term funding from Cenovus, and we believe this transaction will provide compelling value for Cenovus shareholders over the long term," Pourbaix said.

Cenovus-Husky merger announced in October

The company's deal with Headwater comes after a $3.8-billion merger between Cenovus Energy and Husky Energy was announced in October.

The merger will result in a trimming of the workforce by as much as 25 per cent, CBC News confirmed in October.

The majority of the job cuts of 1,720 to 2,150 positions are expected to take place in Calgary, where both firms are headquartered.

The new company will operate as Cenovus Energy and will be based out of Calgary.

With files from the CBC

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