Cenovus Energy Inc. has announced a $5.7 billion cash-and-stock acquisition deal to purchase Athabasca Oil Corp., expanding its existing steam-driven oilsands assets. The company’s CEO, Jon McKenzie, expressed optimism about unlocking production growth from the acquired properties, aiming to increase Athabasca’s current 40,000 barrels per day output to 115,000 barrels per day by 2032.
This strategic move comes in the wake of recent government policy changes that are perceived to facilitate production expansion. The federal government’s classification of a proposed million-barrel-a-day pipeline from Alberta to British Columbia as a national interest project under new legislation has streamlined its regulatory review process. There have been speculations about whether Cenovus and other oilsands companies will invest adequately to meet the capacity of this pipeline by 2032, along with other upcoming pipeline expansions.
McKenzie commended the federal and Alberta governments for their initiatives to enhance the sector’s competitiveness, which is expected to catalyze growth projects at assets like Leismer and Corner within Athabasca’s portfolio. Additionally, recent tax deductions for investments and anticipated royalty incentives in Alberta are seen as further boosts to accelerate oilsands development.
Under the acquisition agreement, Athabasca shareholders can opt to receive $12 in cash or 0.264 of a Cenovus common share per share owned, subject to cash and share availability limits. The transaction has garnered positive feedback from analysts, with Desjardins Securities hailing it as strategically compelling due to the high-quality thermal inventory and favorable oilsands development environment.
The deal signifies a consolidation trend in the Canadian oilsands industry, with Cenovus now commanding a 21.5% share of total oilsands production. The transaction is expected to close in December pending regulatory and shareholder approvals.
Stock reactions were observed with Cenovus shares declining by three percent to $44.86 and Athabasca’s shares rising by 13.5 percent to $12.01. The acquisition aligns with Cenovus’ long-term growth strategy and solidifies its position as a key player in the oilsands sector.
[Source](https://www.cbc.ca/news/canada/calgary/cenovus-energy-athabasca-oil-9.7369384)