Cenovus Energy to buy Husky for $2.9 billion

Updated: October 25, 2020 10:29 PM

Cenovus Energy and Husky Energy announced a $2.9 billon transaction on Sunday to create a new integrated Canadian oil and natural gas company, and the the third largest Canadian oil and natural gas producer.


"The companies have entered into a definitive arrangement agreement under which Cenovus and Husky will combine in an all-stock transaction valued at $23.6 billion, inclusive of debt," the two companies announced in a joint statement on Sunday.

The combined company will operate as Cenovus Energy Inc. and remain headquartered in Calgary, Alberta, the statement says.

The release says it is expected to "generate an incremental $1.2 billion of annual free funds flow, comprised of $600 million in annual corporate and operating synergies and $600 million in annual capital allocation synergies, achievable independent of commodity prices."

The transaction is expected to close in the first quarter of 2021.

“Bringing our talented people and complementary assets together will enable us to deliver the full potential of this resilient new company. The integration of Cenovus’s best-in-class in situ oil sands assets with Husky’s extensive North American upgrading, refining and transportation network and high netback offshore natural gas production, will create a low-cost competitor and support long-term value creation,” Rob Peabody, Husky President and Chief Executive Officer, said in the news release.

“We will be a leaner, stronger and more integrated company, exceptionally well-suited to weather the current environment and be a strong Canadian energy leader in the years ahead,” Alex Pourbaix, Cenovus President and Chief Executive Officer said in the news release. “The diverse portfolio will enable us to deliver stable cash flow through price cycles, while focusing capital on the highest-return assets and opportunities. The combined company will also have an efficient cost structure and ample liquidity. All of this supports strong credit metrics, accelerated deleveraging and an enhanced ability for return of capital to shareholders.”

Husky is in the process of rebuilding the Superior refinery after a fire and explosion in April of 2018.

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