By John Tilak and Ethan Lou
TORONTO/CALGARY, Sept 1 (Reuters) - Canadian Natural Resources Ltd CNQ.TO is nearing a deal to buy Cenovus Energy Inc's CVE.TO heavy oil project in Pelican Lake in northeastern Alberta, for about C$1 billion ($807 million), according to a source familiar with the situation.
Canadian Natural was among bidders in a competitive process for the Pelican Lake asset, Reuters reported in August. Pelican Lake is located near Fort McMurray.
Cona Resources Ltd CONA.TO was another bidder with a fully financed bid that made it to the final round, the source said.
Cona, which changed its name from Northern Blizzard Resources Inc earlier this year, owns the Cactus Lake oil asset, which is located along the border between Alberta and Saskatchewan provinces.
Canadian Natural, Canada's No. 1 independent oil producer, has its own crude oil producing asset adjacent to the Cenovus Pelican Lake property. It would make strategic sense for Canadian Natural, the source said.
The properties use a polymer flooding technology, which helps boost oil recovery. Polymer flood assets are known to have a long life, low decline rates and high free cash flow.
The Pelican Lake asset would be valued at seven to nine times earnings before interest, tax, depreciation and amortization (EBITDA), another source with knowledge of the matter said.
The deal, if finalized, could be announced in the next few days, the sources said.
Canadian Natural declined to comment, while Cenovus and Cona Resources were not immediately available for comment outside regular business hours.
The sales process shows that the appetite for quality assets remains strong, despite a slowdown in energy-sector dealmaking.
Cenovus is looking to sell parts of its portfolio to pay off debt used to part-fund its C$16.8 billion purchase of some ConocoPhillips (NYSE:COP) assets in May.
The Calgary-based company said in July it expected asset sales could fetch more than C$5 billion by the end of this year. first reported that Canadian Natural was in advanced talks to buy Pelican Lake.
($1 = 1.2390 Canadian dollars)