Cenovus Energy announced Monday it has entered a definitive arrangement agreement to acquire Athabasca Oil Corporation in a cash-and-stock transaction with an implied enterprise value of C$5.7 billion (about US$4.1 billion). Cenovus will pay C$12 per share, with between 65 and 75 percent of consideration in cash and 25 to 35 percent in Cenovus shares, subject to shareholder elections and proration. The deal is expected to close in December.
The acquisition adds approximately 45,000 barrels of oil equivalent per day, including thermal production proximal to Cenovus’s Christina Lake, May River and Thornbury assets. The prize assets are Leismer and Corner, with more than 75 years of proved-plus-probable reserves life, and Cenovus sees a pathway to accelerate thermal production to 115,000 barrels a day by 2032 by applying its steam-assisted gravity drainage operating model. The deal also consolidates Cenovus’s ownership of Duvernay Energy Corporation, an oil-weighted position in the Kaybob Duvernay with a path to 20,000 boe/d.
Cenovus expects about $85 million a year in corporate and commercial synergies, mostly captured in the first full year after closing. “This transaction strengthens our position in one of the world’s premier oil-producing regions and is a natural extension of our oil sands strategy,” said president and CEO Jon McKenzie. The transaction values Athabasca’s long-life, low-decline barrels as exactly the kind of asset that compounds under an operator with 30-plus oil sands phase expansions of experience.