Cenovus Energy Inc. has made a significant acquisition by purchasing Athabasca Oil Corp. in a $5.7 billion cash and stock deal to expand its existing oilsands assets. The CEO of Cenovus, Jon McKenzie, believes that recent government policy changes will help drive production growth from the newly acquired properties.
Currently, Athabasca produces 40,000 barrels per day from its oilsands operations, but Cenovus aims to increase this to 115,000 barrels per day by 2032, presenting a substantial organic growth opportunity in the Canadian oilsands sector.
The purchase follows the federal government’s classification of a proposed one million barrels per day pipeline from Alberta to British Columbia as a national interest project. This designation will streamline the regulatory review process for the pipeline’s development.
There have been concerns about whether Cenovus and other oilsands companies would invest sufficiently in production growth to meet the pipeline capacity by 2032. However, McKenzie expressed optimism during a conference call with analysts, citing positive initiatives by the federal and Alberta governments to enhance the sector’s competitiveness.
As part of the agreement, Athabasca shareholders can choose between $12 in cash or 0.264 of a Cenovus common share for each share they hold, with set limits on the total cash and shares available. The deal is expected to close in December, pending regulatory and shareholder approvals.
The acquisition is seen as strategically valuable due to the scarcity of top-tier thermal inventory and the favorable environment for oilsands development. Industry analysts view the deal positively, noting the increasing importance of Canadian oilsands producers in the global oil market.