OREANDA-NEWS. March 31, 2017. ConocoPhillips is selling some Canadian unconventional oil and natural gas assets for $13.3bn, far exceeding its asset sales target to lower debt and shore up its balance sheet.

The world's biggest independent is selling its 50pc stake in the Foster Creek Christiana Lake oil sands partnership and the majority of its western Deep Basin gas assets, both to Cenovus. In addition, ConocoPhillips will get five years of uncapped contingent payments, triggered when Western Canada Select (WCS) crude prices exceed C$52/bl.

Of the $13.3bn total sales price, $10.6bn is cash and the remaining is through the ownership of 208mn Cenovus shares, valued at $2.7bn as of yesterday. ConocoPhillips will retain its operated 50pc stake in the Surmont oil sands joint venture and the 100pc operated Blueberry-Montney unconventional acreage position.

ConocoPhillips will use the proceeds to reduce debt to $20bn this year, advancing an earlier target to meet that mark only by the end of 2019. Following the stepped up debt reduction, it has now set a new debt target of $15bn by 2019. Its total debt increased to $27.3bn as of the end of 2016 versus $24.9bn a year earlier, taking its debt-to-capital ratio to 44pc from 38pc a year earlier.

"Our stated plan was to accelerate our value proposition by reducing debt with asset sales," chief executive Ryan Lance said. "Clearly, this transaction accelerates those efforts and provides an important catalyst that should allow investors to have clarity and confidence in our future direction."

In addition to retiring debt as it matures, the company had said in February that it will look to use additional cash from higher prices or asset sales to bring down the total. It had set an asset sales target of $5bn-$8bn. Following the deal, the company has set a new asset sales target of $16bn in 2017.

With the bolstered balance sheet, the company will continue to remain on the lookout for new asset acquisitions, but its immediate priority still remains paying down its debt.

"We are active in the market today, but we are satisfied with the portfolio," Lance said in a call following the deal.

ConocoPhillips will also use the proceeds to buy back shares. Its board of directors has approved an increase in the existing share repurchase program to $6bn, double the previous $3bn mark. The company intends to triple its planned 2017 buybacks from $1bn to $3bn, and keep the remaining $3bn for 2018 and 2019.

It expects the deal to close in the second quarter.