Cenovus Energy to Acquire Athabasca Oil for $5.7 Billion

Cenovus Energy (TSE: CVE) has announced a $5.7 billion deal to acquire Athabasca Oil (TSE: ATH) in a cash-and-stock transaction. The acquisition will strengthen Cenovus’ position in Alberta’s oil sands, making it one of Canada’s largest crude producers. This follows Cenovus’ acquisition of MEG Energy last year, as part of its strategy to boost efficiency, reduce costs, and increase cash flow.

Athabasca Oil shareholders will receive 0.264 Cenovus shares for each share they own, valuing the deal at $5.76 billion. The offer price of $12 per share represents a 13% premium over Athabasca Oil’s closing price of $10.58 on October 2. The deal is structured as 75% cash and 25% stock, with cash payments capped at $4.3 billion.

Cenovus expects the acquisition to add 45,000 barrels of crude oil equivalent per day to its production. Athabasca’s assets in Alberta’s oil sands boast over 75 years of proved and probable reserve life, with potential to reach 115,000 barrels per day by 2032. The transaction, approved by both companies’ boards, is set to close in December pending shareholder and regulatory approvals.

Cenovus’ stock has surged 90% over the past year, currently trading at $46.25 on the Toronto Stock Exchange, as oil prices have risen.