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Employees at Cenvus Energy’s Christina Lake facility.

Brent Lewin

Cenovus Energy Inc.'s CEO is confident his company can meet an ambitious asset-sales target despite shaky oil markets, offering some relief to investors who worry about its elevated debt load.

Cenovus hopes to sell $4-billion to $5-billion of assets to pay down what it borrowed to help fund the company's $17.7-billion acquisition of oil sands and natural gas assets from former partner ConocoPhillips Co.

The company, whose shares have been hit hard since it announced the deal in late March, also reported a reduction in capital spending and a massive jump in second-quarter net income, owing largely to a one-time gain.

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Investors were cheered by the developments, driving up Cenovus shares more than 9 per cent on the Toronto Stock Exchange. Doubts have lingered about its ability to unload all of the properties as a retreat in oil prices below $50 (U.S.) a barrel has squelched deal-making.

But chief executive Brian Ferguson said on Thursday that potential buyers with deep pockets are showing interest in the conventional oil and gas assets Cenovus has on offer. Some deals could be finalized in the current quarter, he said.

"We continue to see very strong interest in all four properties and from a variety of parties, many of them that are very, very well-funded and do not rely on capital-markets activity," Mr. Ferguson said during a conference call.

The ConocoPhillips deal surprised many investors who had grown accustomed to the company's conservative operating style, which had emphasized preserving cash and keeping debt down as the oil-industry downturn dragged on.

Mr. Ferguson has announced his retirement, though he said he will stay on for a while to help manage the transition to a new CEO. The search for a replacement is under way.

The acquisition, one of the largest in the Canadian oil patch, included ConocoPhillips's 50-per-cent stake in the Foster Creek and Christina Lake oil sands projects in Alberta, doubling its corporate output, as well as natural gas holdings in the Deep Basin region in the western part of the province.

The company has joined a growing list of energy companies cutting its capital spending amid a murky oil-price outlook, but it contends it will still meet its production target. Cenovus said it will spend $200-million (Canadian) less than it had planned previously. That lowers the budget to $1.7-billion.

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Improving productivity and well-startup scheduling in its oil sands operations allowed it to reduce its outlay for the year, and further cuts are possible, it said.

A sustained recovery in the shares, which had fallen by more than 40 per cent from when the company announced the acquisition, will require more certainty in meeting its big goals, said Andy Pusateri, an analyst at Edward Jones.

"Maybe investors have more confidence now, but I think the market is still paying attention to two things, the most important being the asset sales, which they need to pay the debt down. The second is the CEO search," Mr. Pusateri said.

In the second quarter, Cenovus earned a net $2.6-billion, or 2.37 a share, up from a year-earlier loss of $267-million, or 32 cents a share.

Net earnings included a gain of $1.8-billion from a revaulation stemming from a deemed disposition of its interest in the now-defunct partnership with ConocoPhillips.

Operating earnings were $398-million, or 36 cents a share, compared with a loss of $39-million or 5 cents a share, in the second quarter of 2016.

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Oil sands production surged 84 per cent to about 262,000 barrels a day as a result of the acquisition.

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