Cenovus Energy acquisition of Husky Energy : Cenovus Energy has signed an all-stock deal worth around CAD 3.8 billion ($2.9 billion) to acquire rival Canadian oil and gas company Husky Energy.

The operations of Cenovus Energy include oil sands projects across northern Alberta in Canada. The company also has natural gas and oil production in Alberta and British Columbia alongside 50% stakes in a couple of refineries in the US.

Husky Energy, on the other hand, has operations in Western and Atlantic Canada, the US, and also in the Asia Pacific region. It has a couple of core businesses, which include the Integrated Corridor operations in Western Canada and the US through upstream production and downstream upgrading and refining assets.

The second core business is its offshore operations across the Asia Pacific and Atlantic regions.

The merger between Cenovus Energy and Husky Energy will pave the way for a new integrated Canadian oil and natural gas company that will possess an advantaged upstream and downstream portfolio, which will give improved free funds flow generation and opportunities for superior return for investors.

The combined oil and gas company, which will operate as Cenovus Energy, is valued at CAD 23.6 billion ($17.97 billion), including debt.

It will have production of around 750,000 barrels of oil equivalent per day (BOE/d), making it the third-largest oil and natural gas producer in Canada. Its upgrading and refining capacity will be 660,000 BOE/d, which makes it the second-largest Canadian-based refiner and upgrader.

Alex Pourbaix – Cenovus Energy President and CEO, commenting on Cenovus Energy acquisition of Husky Energy, said: “We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead.

“The diverse portfolio will enable us to deliver stable cash flow through price cycles, while focusing capital on the highest-return assets and opportunities. The combined company will also have an efficient cost structure and ample liquidity.

“All of this supports strong credit metrics, accelerated deleveraging and an enhanced ability for return of capital to shareholders.”

As per the terms of the deal, each share of Husky Energy will be exchanged for 0.7845 of Cenovus Energy’s shares in addition to 0.0651 of a Cenovus Energy share purchase warrant. Cenovus Energy’s shareholders will own nearly 61% of the enlarged company, while Husky Energy’s shareholders will own a stake of around 39%.

Commenting on Cenovus Energy acquisition of Husky Energy, Rob Peabody – Husky Energy President and CEO said: “Bringing our talented people and complementary assets together will enable us to deliver the full potential of this resilient new company.

“The integration of Cenovus’s best-in-class in situ oil sands assets with Husky’s extensive North American upgrading, refining and transportation network and high netback offshore natural gas production, will create a low-cost competitor and support long-term value creation.”

The closing of Cenovus Energy acquisition of Husky Energy is expected in Q1 2021, subject to both the firms’ shareholder approvals, regulatory approvals, approval of the Court of Queen’s Bench of Alberta.

  Alex Pourbaix, Canada, Cenovus Energy, Husky Energy, Rob Peabody