Business Β· Calgary
Cenovus to Buy Athabasca Oil in $5.7-Billion Deal
In brief
Cenovus Energy has agreed to buy Athabasca Oil Corp. in a cash-and-stock deal valued at $5.7 billion, expanding its steam-driven oilsands business, CBC News and The Canadian Press reported on Monday.
Athabasca shareholders can choose $12 in cash or 0.264 of a Cenovus share for each share they own, subject to caps: total cash is limited to $4.3 billion and the share portion to 44.4 million Cenovus shares. Cenovus expects the deal to close in December if shareholders and regulators approve it.
According to CBC, Athabasca currently produces about 40,000 barrels a day, and Cenovus believes that could rise to about 115,000 by 2032. Chief executive Jon McKenzie said recent federal and Alberta policy changes, including a broader immediate tax deduction for business investment and expected provincial royalty incentives, would help it grow production at the acquired Leismer and Corner properties.
Analysts quoted by CBC said the price was high compared with earlier oilsands deals, reflecting renewed investor interest in long-life Canadian oil assets.
Why it matters
The deal is a bet on long-term growth in oilsands output just as new export pipeline capacity is being planned. It could shape how much oil is available to fill those pipelines.
Sources
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