(New throughout, adds comments from people close to chief
By Ethan Lou and Nia Williams
TORONTO, April 11 Cenovus Energy Inc
will do more hedging after its acquisition of ConocoPhillips
assets, the Canadian company's Chief Executive Brian
Ferguson said on Tuesday as he mounted a charm offensive on
investors who balked at the deal.
Ferguson is known as a low-key and conservative chief
executive in the western Canadian oil patch, and his
C$17.7-billion ($13.3-billion) bid last month for the assets of
ConocoPhillips, the latest international player to exit the
country, had confounded investors and analysts.
The deal, which effectively doubles the size of Cenovus
while denting its pristine balance sheet and making it more
exposed to changes in oil prices, is seen as a test for
Ferguson's legacy. The 60-year-old has been with the company and
its predecessor for most of his life.
"When we close the transaction, we would definitely be
adding more hedge volumes," Ferguson said at an industry event
in Toronto, where he was seeking to sell his ambitious plan.
Investors last month sent the company's shares crashing in their
biggest single-day drop on news of the deal.
Despite a previously strong balance sheet, Cenovus had
stayed on the sidelines even as domestic peers eagerly bought
assets from retreating foreign oil majors. Eventually, weighed
by C$4 billion ($3 billion) cash, Ferguson signed what some
analysts and investors said was an uncharacteristic deal.
Ferguson said on Tuesday that the "strategic rationale" for
the deal is well understood by investors, although he noted that
some have questioned the company's plan for financing it through
selling shares, divestitures and taking on debt.
The company has 75 percent of permanent financing in place
and has seen strong interest in the assets it is selling,
Ferguson said, adding, "We’ve had multiple inbound inquiries
from various sources - private equity funds, pension plans,
Some who know Ferguson well say he has made the right move
at the right time.
"When he puts a strategy in place it will be things he sees
coming down the road that are perhaps not what other people will
see," said Greg Stringham, a former executive with industry
association the Canadian Association of Petroleum Producers who
has known Ferguson for 20 years.
A person close to Cenovus who has known and worked with
Ferguson for over two decades said the deal will determine how
Ferguson is remembered in the oil patch.
"When you double the size of the company, there will be a
jury at some point, whether it is six months from now or six
years from now," the person said.
($1 = 1.3416 Canadian dollars)
(Additional Reporting by John Tilak; Editing by Jim Finkle,
Jonathan Oatis and Frances Kerry)