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Cenovus Energy has struck a deal to sell its 50% stake in WRB Refining LP to Phillips 66 for $1.4 billion, marking the end of a long-standing joint venture that anchored the Canadian company’s downstream strategy for nearly two decades.

The sale, announced Tuesday, hands full control of the Wood River refinery in Illinois and the Borger refinery in Texas to Phillips 66. Combined, the facilities can process 495,000 barrels per day, with Cenovus’ share previously amounting to half.

Refocusing on Controlled Assets

For Calgary-based Cenovus, the decision is part of a larger pivot. The company will now streamline its downstream portfolio around five wholly owned facilities — the Lloydminster Upgrader, Lloydminster Refinery, and three U.S. refineries in Lima, Toledo, and Superior. Together, these operations carry a 472,800-barrel daily capacity, more than half of it geared for heavy crude.

“After the sale of WRB, our downstream business will be more focused, comprised of assets we control,” said Jon McKenzie, Cenovus’ president and CEO. “The proceeds will allow us to accelerate shareholder returns in the near term.”

The proceeds are earmarked for debt reduction and share buybacks, aligning with Cenovus’ strategy of capital discipline. The company disclosed it had already repurchased nearly 19 million shares for $388 million at an average price of $20.59 apiece in the third quarter through August.

A Legacy Partnership Ends

The WRB joint venture traces back to 2007, when Cenovus’ predecessor EnCana entered into a 50-50 partnership with ConocoPhillips, Phillips 66’s parent company. The deal secured U.S. refining capacity for Canadian oil sands output, giving Cenovus a vital outlet to the Midwest and Gulf Coast markets.

But the energy landscape has shifted. With Phillips 66 under activist scrutiny from Elliott Management, the timing of Cenovus’ exit is notable. Elliott, which has built a multibillion-dollar stake in the refiner, has pressed for operational streamlining and boardroom changes. Phillips 66 last year added former Cenovus executive Robert Pease to its board under Elliott’s pressure campaign.

Phillips 66 Tightens Its Grip

For Phillips 66, the acquisition consolidates ownership of two strategic U.S. refineries, enhancing its already formidable refining footprint.

“With full ownership of the Wood River and Borger refineries, we are strengthening our integrated business,” said Mark Lashier, Phillips 66 chair and CEO. “This deal should deliver about $50 million annually in synergies and unlock opportunities for low-capital, high-return projects that drive long-term value.”

The transaction, advised by Sidley Austin LLP partners Atman Shukla and Cliff Vrielink, is expected to close by the end of the third quarter, pending regulatory approvals.