Cenovus Energy Inc. has announced a $5.7 billion cash and stock acquisition of Athabasca Oil Corp., expanding its already substantial steam-driven oilsands portfolio. The CEO, Jon McKenzie, expressed optimism about increasing oilsands production from Athabasca’s current 40,000 barrels per day to 115,000 barrels per day by 2032.
This move comes shortly after the federal government designated a proposed million-barrel-a-day pipeline from Alberta to British Columbia as the first national interest project. The streamlined regulatory review process for this pipeline and upcoming expansions has raised questions about industry readiness to meet the demand by 2032.
McKenzie praised recent government policy shifts that enhance the sector’s competitiveness, mentioning positive steps that will facilitate growth projects at Athabasca’s assets such as Leismer and Corner. Additionally, the announcement by Prime Minister Mark Carney allowing broader tax deductions for investments will support accelerated growth initiatives.
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 total cash and shares available. Analysts view the acquisition as strategically significant, given the scarcity of top-tier thermal inventory and favorable conditions for oilsands development.
The deal reflects a trend of consolidation in the Canadian oilsands sector, with Cenovus now holding 21.5% of total oilsands output. The transaction is expected to close in December, subject to customary approvals.
Cenovus shares closed down three percent at $44.86, while Athabasca’s shares rose by 13.5 percent to $12.01 following the announcement.
