Cenovus buys rail loading terminal from Canexus for $75 million

CALGARY, Alberta -- Cenovus Energy Inc. 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' strategy to create a portfolio of transportation options designed to maximize market access and capture global prices for its oil.

Located approximately 50 km 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.

Bob Pease, executive V.P., Markets, Products & Transportation, said, "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. 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."

Cenovus said it plans to hire a third-party service provider to manage the rail car trans-loading facility. 

Cenovus began moving its oil through the facility in 2014 and has a multi-year agreement for bitumen blend pipeline receiving and unit train loading services.

The transaction is expected to close on Aug. 31.