[Editor's note: This story was updated at 12:17 p.m. CST Sept. 5.]
Canadian Natural Resources Ltd. (NYSE: CNQ) said Sept. 5 it has agreed to buy Cenovus Energy Inc.'s (NYSE: CVE) Pelican Lake heavy oil operations in Alberta for C$975 million (US$787 million), the company's second acquisition this year.
The company has its own crude oil producing asset adjacent to the Cenovus Pelican Lake property, and both use a similar technology to boost oil recovery.
Analysts said Canadian Natural paid a price that was within estimates, and the acquisition will help it reduce costs in Pelican Lake.
Reuters reported last week that Canadian Natural was in advanced talks to buy the Pelican Lake assets.
Canadian Natural shares opened higher and extended gains more than 1.7% to C$39.37 after news of the deal. By mid day, the stock had moderated gains and stood at C$39.04, up 0.8%.
Cenovus shares were up as high as 4.2% at C$10.36 before trading at C$10.22, up 2.7%. The benchmark Canada share index was down 0.8%.
The company was among Canadian producers who snapped up assets this year from foreign oil majors who departed the region.
In a separate statement on Sept. 5, Cenovus said the proceeds from the Pelican Lake sale would be used to pay down debt used to fund the $13.3 billion acquisition of some assets from ConocoPhillips (NYSE: COP) in March.
Cenovus also said it was close to selling its Suffield oil and natural gas assets in Alberta, which could fetch between C$500 million and C$600 million.
CIBC Capital Markets and Barclays Capital Canada Inc. were Cenovus's financial advisers. The sale is expected to close by Sept. 30. (US$1 = C$1.2390)