Business
Cenovus buys rail loading terminal from Canexus for $75 million
Facility ownership strengthens market access CALGARY , June 4, 2015 /CNW/ - Cenovus E...
About this update from Cenovus Energy Inc.
[{"type":"text","content":"\n\nFacility ownership strengthens market access\n\n\n\nCALGARY, June 4, 2015 /CNW/ - Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has agreed to purchase Canexus Corporation's North American Terminal Operations (NATO), a crude-by-rail trans-loading facility, for $75 million, subject to adjustments. The acquisition is part of Cenovus's strategy to create a portfolio of transportation options designed to maximize market access and capture global prices for its oil. \n\n\"By purchasing this facility at an attractive price, we're taking greater control over a larger part of the value chain for our product, which we believe will result in improved margins and higher returns for our shareholders,\" said Bob Pease, Cenovus Executive Vice-President, Markets, Products & Transportation. \"Ownership gives us additional flexibility to get our growing crude oil production to market and allows us to reduce the risk to Cenovus due to pipeline congestion. It also increases our ability to access niche markets not served by pipeline.\" \n\nLocated approximately 50 kilometres northeast of Edmonton in Bruderheim, Alberta, the terminal has strategic value for Cenovus due to its existing pipeline connections to the Cold Lake and Access crude oil pipeline systems as well as its links to the Canadian Pacific and Canadian National rail lines. Cenovus currently transports production volumes from its Foster Creek steam-assisted gravity drainage (SAGD) operation to Bruderheim on the Cold Lake pipeline. The terminal also has the ability to be expanded at a relatively low capital cost if changing market conditions make rail economics more attractive. Additionally, there is undeveloped land included in the transaction that provides significant potential for Cenovus as it evaluates a number of possible value-added projects. \n\n\"We believe a key benefit of acquiring this facility is the ability it provides to quickly and economically expand rail car loading capacity in response to changing market conditions,\" said Pease. \"We expect rail will be an important component of our transportation strategy for years to come. As the owner of the facility, we reduce our risk of having to compete for expensive rail terminal capacity during periods of pipeline congestion or potentially having production volumes stranded.\" \n\nCenovus plans to hire a third-party servi...