What happened

Shares of Cenovus Energy (NYSE:CVE) sold off on Tuesday, falling more than 10% by 10:45 a.m. EDT. Fueling the latest drop was the announcement that CEO Brian Ferguson will retire later this year, as well as an update on the company's growth plans amid the fallout of a decision to buy several oil and gas properties from ConocoPhillips (NYSE:COP). It's a decision that has resulted in the stock plunging more than 40% over the past three months.

So what

Cenovus Energy announced that CEO Brian Ferguson would retire from his executive role at the end of October, before transitioning to an advisory role through the end of next March, to minimize disruption during the transition. The company said that it would immediately begin a global search for a new chief executive. But with no successor lined up, the move is adding uncertainty at a time when the company is still reeling following its decision to buy out ConocoPhillips' 50% share of their joint venture, as well as several natural gas assets.

Two green oil wells sitting under a stormy grey sky.

Image source: Getty Images.

It's a transaction that required Cenovus to take on a significant amount of debt to finance the $10.6 billion cash payment to ConocoPhillips. Initially, Cenovus Energy planned to sell 1.8 billion Canadian dollars' ($1.36 billion) worth of assets to help offset the cost. However, the company announced today that it now plans to sell between CA$4 billion ($3 billion) and CA$5 billion ($3.8 billion) in non-core assets by the end of this year, which will enable it to fully repay its CA$3.6 billion ($3.7 billion) bridge loan. Even with those assets sales, the company expects to generate 14% annual growth in funds from operations through 2021 as long as crude averages $55 per barrel. The company plans to drive that growth by increasing production at a 6% compound annual rate, primarily by expanding output from its oil sands assets and the Deep Basin gas assets it bought from ConocoPhillips. That growth will enable the company to steadily improve its balance sheet and reach its long-term financial targets. That said, with crude currently below $45 per barrel, investors think that the company is overestimating its growth potential in the current market.

Now what

The market continues to punish Cenovus Energy for its decision to buy several of ConocoPhillips' oil and gas properties in Canada because it stretched its balance sheet way too thin. While the company plans to address those financial concerns by selling more assets, its overall direction remains uncertain given that the CEO who orchestrated the deal will retire. Making matters worse, crude continues to tumble lower, which will make it much harder for the company to achieve its optimistic growth and balance-sheet targets.

Matt DiLallo owns shares of ConocoPhillips. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.