Cenovus Energy Inc. has announced a $5.7 billion cash-and-stock deal to acquire Athabasca Oil Corp., expanding its existing steam-driven oilsands assets. The company’s CEO, Jon McKenzie, expressed optimism about the potential for production growth from the newly acquired properties, aiming to increase current oilsands output from 40,000 barrels per day to 115,000 by 2032.
The acquisition comes on the heels of the federal government’s designation of a proposed million-barrel-a-day pipeline from Alberta to British Columbia as a national interest project, streamlining its regulatory review process. There have been concerns about whether Cenovus and other oilsands companies would invest sufficiently to fill the pipeline by its anticipated startup in 2032.
McKenzie highlighted positive steps taken by the federal and Alberta governments to enhance the sector’s competitiveness, pointing to upcoming royalty incentives and tax deduction measures that could accelerate growth projects such as those at the Leismer and Corner assets acquired from Athabasca.
Under the terms of the agreement, Athabasca shareholders can choose between $12 in cash or 0.264 of a Cenovus common share per share held, with limits on the total cash and shares available. Analysts view the acquisition as strategically valuable given the scarcity of top-tier thermal inventory and the favorable environment for oilsands development.
The deal further consolidates Cenovus’s position in the oilsands market, increasing its share of total oilsands output to 21.5 percent. The transaction is expected to close in December, subject to regulatory and shareholder approvals.
Cenovus shares closed down three percent following the announcement, while Athabasca’s shares saw a 13.5 percent increase. The move aligns with a trend of consolidation among Canadian oilsands operators, with large-cap companies like Cenovus, ConocoPhillips, and Suncor Energy dominating the sector.
