Cenovus Energy Inc. has announced the acquisition of Athabasca Oil Corp. for $5.7 billion in cash and stock, expanding its existing oilsands portfolio. The CEO of Cenovus, Jon McKenzie, expressed optimism about the growth potential of the newly acquired assets, aiming to increase oilsands production from the current 40,000 barrels per day to 115,000 by 2032.
The acquisition comes following recent government policy changes that are expected to facilitate production growth in the oilsands sector. The federal government’s approval of a major pipeline project as a national interest initiative has streamlined regulatory processes, encouraging investments in the sector.
McKenzie highlighted the positive impact of government initiatives on advancing growth projects, particularly at the Leismer and Corner assets acquired from Athabasca. He also mentioned the tax deduction measures introduced by Prime Minister Mark Carney as a factor that could accelerate growth in the sector.
The agreement offers Athabasca shareholders the choice of receiving $12 in cash or 0.264 of a Cenovus common share per share held, with limits on the total cash and shares available. Analysts view the acquisition as strategically significant, given the scarcity and value of top-tier thermal inventory in the oilsands industry.
The deal is part of a trend of consolidation in the Canadian oilsands sector, with larger companies like Cenovus, ConocoPhillips, Canadian Natural Resources Ltd., Suncor Energy Inc., and Imperial Oil Ltd. dominating the market. The acquisition solidifies Cenovus’ position, increasing its share of total oilsands output to 21.5%.
The transaction is expected to close in December, subject to regulatory and shareholder approvals. Cenovus shares closed down three percent at $44.86 following the announcement, while Athabasca’s shares rose by 13.5% to $12.01.
