Cenovus Energy (TSX:CVE) made a splash in the oil patch Wednesday with a $17.7-billion deal to buy a big chunk of USA -based ConocoPhillips's oilsands assets, doubling the size of the Calgary-based company in the process.

The deal covers Conoco's 50% non-operated interest in the Foster Creek Christina Lake oil sands partnership, as well as the majority of its western Canada Deep Basin gas assets.

ConocoPhillips Canada will maintain its operated 50% interest in the Surmount oil sands joint venture along with its 100% operated Blueberry-Mountey unconventional acreage position.

The surprise disposal, the largest in ConocoPhillips's history, comes with the company under pressure to cut its debt burden.

Cenovus shares, also listed in NY, dropped by over 8% to US$11.97.

"Cenovus goes from exhibiting one of the strongest balance sheets in the peer group, to one of the most levered", analysts at Raymond James said in a note to clients, adding that Cenovus will also be adding western Canadian oil production at a time when pipeline capacity out of the region is getting squeezed.

Royal Dutch Shell PLC earlier this month sold most of its oil sands holdings to Canadian Natural Resources Ltd.

Tim Pickering, founder and chief investment officer of Calgary-based Auspice Capital Advisors predicted the Cenovus share price slump would be temporary however. The companies expect the deal to close in the second quarter. The deal will give Conoco a almost 25% stake in Cenovus, which lost $545 million (65 cents per share) on revenue of $12.134 billion previous year.

Calgary-based Cenovus will pay C$14.1 billion in cash and 208 million Cenovus common shares, and launched an offering of common shares to raise C$3 billion ($2.25 billion).

The DBRS credit rating agency said Wednesday it would place Cenovus's ratings under review with negative implications because of the increase in debt from the ConocoPhillips deal.

The company said it signed a definitive agreement with Cenovus Energy Inc. "ConocoPhillips is focused elsewhere, and Cenovus has made it a priority to expand in the oil sands".

In a separate statement, Conoco said it would use the proceeds to reduce debt to $20 billion in 2017, and to double a share repurchase program to $6 billion.