Cenovus to buy Athabasca Oil in $5.7-billion deal

Cenovus Energy Inc. has agreed to buy Athabasca Oil Corp. in a cash-and-stock deal with an implied enterprise value of $5.7 billion, the company said Oct. 5.

Athabasca shareholders can take $12 in cash for each share, 0.264 of a Cenovus share, or a mix, according to the Cenovus news release. Holders who make no election receive cash. The company said total cash will be capped at $4.3 billion, or 75 per cent of the consideration, and total share issuance at 44.4 million Cenovus shares, so the final mix will be 65 to 75 per cent cash and 25 to 35 per cent shares, subject to pro-ration.

The purchase adds about 45,000 barrels of oil equivalent a day of production, Cenovus said. It includes Athabasca’s thermal oilsands assets in northeastern Alberta, which the company said it aims to lift to 115,000 barrels a day by 2032, and a Duvernay shale position in the Kaybob area that it said could grow to a sustainable 20,000 barrels of oil equivalent a day.

Cenovus said the assets carry more than 75 years of proved plus probable reserve life, based on the estimated 2026 exit production rate.

“This transaction strengthens our position in one of the world’s premier oil-producing regions,” Jon McKenzie, Cenovus’s president and CEO, said in the release.

Both boards unanimously approved the agreement, and Athabasca’s directors and executive officers have signed support agreements covering about 2.2 per cent of its outstanding shares. The deal needs regulatory approvals and a vote by Athabasca shareholders. Cenovus said it expects to close in December and that there is no financing condition.

The offer was about a 13.4 per cent premium to Athabasca’s previous close, according to Reuters reporting carried by BNN Bloomberg. That report said Athabasca shares rose 14.3 per cent to $12.17 in morning trading on Oct. 5, while Cenovus shares fell 2.8 per cent.

For Albertans, the deal consolidates more of the province’s oilsands output under one Calgary-based producer at a time when Ottawa and Edmonton are pushing to raise crude production and export capacity. The release did not address jobs, head office or staffing, and the company has not said what the combination means for Athabasca’s workforce.

The announcement came the same day as another large Alberta energy transaction. Narcity reported that Suncor Energy Inc. is selling its interests in the Terra Nova, White Rose and West White Rose offshore projects off Newfoundland and Labrador to Ithaca Energy PLC for $1.2 billion in cash, plus up to $350 million depending on future oil prices. The sale is expected to close in early 2027, and Suncor is raising its monthly share buybacks to $750 million from $500 million, the report said.

Cenovus bought MEG Energy for $8.6 billion a year earlier, according to the Reuters report.

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