CALGARY — Cenovus Energy has signed a deal to acquire Athabasca Oil in a $5.7 billion cash-and-stock deal that will expand the energy giant’s footprint in Alberta’s oil sands.The transaction comes approximately a year after Cenovus acquired MEG Energy for $8.6 billion and adds decades of additional thermal oil resources to the company’s portfolio.The company said on Monday that the Athabasca acquisition will add roughly 45,000 barrels of oil equivalent per day to its production.Athabasca’s Leismer and Corner thermal oil properties are a major part of the deal, with Cenovus stating the assets have more than 75 years of proved and probable reserve life and could eventually help increase production from the properties to 115,000 barrels per day (bpd) by 2032.Thermal oil sands projects use steam injected underground to heat heavy crude, allowing it to flow to production wells and be brought to the surface.Cenovus president and CEO Jon McKenzie said during a conference call Monday morning that the acquisition gives the company more options to generate returns for shareholders while maintaining a strong balance sheet..“One of the things that this does for us as well, is it just increases our ability to be opportunistic,” he said.“We have a number of avenues with which we can add value for shareholders on a per share basis, whether that is de-leveraging, whether that is buying back our stock, dividends, or future resource growth. So this just increases that sense of balance that exists across our portfolio, and we're excited about the opportunity to take advantage of that.”McKenzie also pointed to recent announcements regarding government tax and royalty policy as a factor that could encourage further oil sands development.He specifically cited Ottawa’s Productivity Mega Deduction — which Prime Minister Mark Carney said would allow businesses to immediately deduct the cost of a much wider range of new capital investments once the assets become available for use — and additional growth incentives on the royalty side from the Alberta government.“Having the federal government come forward with accelerated capital cost allowance is not immaterial to this,” McKenzie said.“We're looking at a number of different things, but what we continue to do is we just create this balanced portfolio where we have a really healthy company in terms of the resource availability in front of us. We have a bulletproof balance sheet, and we have the ability to get value back to shareholders through multiple channels, as we become more and more opportunistic.”.Cenovus considers $3 billion sale of Alberta oil and gas assets.Athabasca shareholders will receive 0.264 Cenovus shares for each share held, valuing the transaction at roughly $5.76 billion, based on Athabasca's 480.34 million shares outstanding.The implied offer price of $12 a share represents a premium of about 13.4% to Athabasca's Friday closing price.The total cash available is capped at $4.3 billion, and the number of Cenovus shares available under the offer is limited to 44.4 million.Investors reacted sharply to Monday’s announcement, with Athabasca’s shares jumping more than 14% in morning trading to roughly $12.17, while Cenovus shares fell approximately 3%.The deal remains subject to shareholder, regulatory, and other customary approvals and is expected to be completed by December.
