Cenovus Energy buys Athabasca Oil in US$5.7 bln deal backed by CK Hutchison
Cenovus Energy, backed by CK Hutchison, agrees to acquire Athabasca Oil Corporation for US$5.7 billion. The deal boosts thermal production to 115,000 barrels per day by 2032 and is expected to yield US$85 million in annual synergies.
Cenovus Energy, backed by CK Hutchison (0001), announced on Monday it has agreed to acquire Athabasca Oil Corporation in a cash-and-stock deal with an implied enterprise value of US$5.7 billion (HK$44.46 billion). The transaction is expected to lift Cenovus's thermal production to 115,000 barrels per day by 2032.
“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 Jon McKenzie, Cenovus president and chief executive, in a statement.
Cenovus said it expects to realise approximately US$85 million per year of corporate and commercial synergies, with the majority captured in the first full year following the closing of the transaction. The deal adds roughly 45,000 barrels of oil equivalent per day to Cenovus's core oil sands business, including thermal production adjacent to its Christina Lake, May River, and Thornbury assets.
The acquisition also leverages Cenovus’s steam-assisted gravity drainage (SAGD) operating expertise in Athabasca’s assets, including enhancing reservoir performance, reducing steam-to-oil ratios, and accelerating resource recovery. Cenovus noted its track record of completing over 30 profitable oil sands phase expansions positions it uniquely to optimise the value of the acquired SAGD assets.
The deal consolidates ownership of Duvernay Energy Corporation, a high-quality, oil-weighted position in the Kaybob Duvernay, with the option to accelerate development and grow production to a sustainable 20,000 barrels of oil equivalent per day.
Cenovus said it will acquire all of the issued and outstanding common shares of Athabasca for US$12 per share, payable in cash and Cenovus common shares. CK Hutchison and the Li Ka-shing family hold approximately 30 per cent of Cenovus’s shares as the major shareholders.