Cenovus strikes $4 billion deal to buy Athabasca Oil, expand production
CVE•Cenovus will buy Athabasca Oil in a C$5.7 billion ($4 billion) cash-and-stock deal, adding about 45,000 barrels of oil equivalent per day. Cenovus says the assets could produce 115,000 barrels per day by 2032.
1. Deal terms and production
Cenovus said it will acquire Athabasca Oil in a cash-and-stock transaction expected to close in December. Athabasca shareholders will receive 0.264 Cenovus shares for each share held. The deal adds about 45,000 barrels of oil equivalent per day to Cenovus’ thermal oil sands production, which the company says could reach 115,000 barrels per day by 2032.
2. Project plans and reaction
Cenovus CEO Jon McKenzie told analysts the company is considering advancing the Corner project three years ahead of Athabasca’s existing development plan, targeting about 40,000 barrels per day by 2032. Cole Smead, who owns Cenovus shares, called the move aggressive and said the company was paying a high price for the assets.
3. Pipeline and carbon capture
The acquisition also gives Cenovus full ownership of Athabasca subsidiary Duvernay Energy, where Cenovus sees potential to grow output to 20,000 barrels of oil equivalent per day. A proposed 1-million-barrel-per-day export pipeline to the Pacific coast could support oil sands production growth, but Cenovus and other major producers have not made a final investment decision on a large-scale carbon-capture project that the government has said is a condition for the pipeline.
