Cenovus, Husky Announce Merger

Cenovus, Husky Announce Merger
A Cenovus Energy sign is shown outside the Bow office tower in Calgary, Alta on Thursday July 30, 2015. Cenvus shares office space with a number of other businesses, mostly oil and gas related businesses. Jim Wells/Calgary Sun/Postmedia Network

Cenovus Energy and Husky Energy have announced a transaction to create a new Canadian oil and natural gas company with an integrated upstream and downstream portfolio which will provide increased funds, according to a press release.

The merger will see the two companies combine in an all-stock transaction valued at $23.6 billion, inclusive of debt, and is expected to close in Q1 2021.

 Alex Pourbaix, CEO of Cenovus, said, “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. The diverse portfolio will enable us to deliver stable cash flow through price cycles while focusing capital on the highest-return assets and opportunities.”

Some of the highlights of the merger include anticipated annual run-rate synergies of $1.2 billion, as well as expected free funds flow break-even at West Texas Intermediate (WTI) pricing of $36 per barrel (bbl) in 2021, and at less than WTI $33/bbl by 2023.

The merger spells good news for the shareholder as well with an anticipated quarterly dividend increase of $0.0175 per share (upon Board approval) and positioned for consistent growth.



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