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CALGARY — Just days after the announcement of the Pacific Link Pipeline, Cenovus Energy says it has reached a $5.7-billion deal to acquire Athabasca Oil Corporation, adding significant oilsands production and long-life reserves to its portfolio.
Cenovus announced Sunday it has entered into a definitive agreement to acquire all outstanding shares of Athabasca in a cash-and-stock transaction.
The deal would add about 45,000 barrels of oil equivalent per day to Cenovus production, including thermal oilsands assets near the company’s Christina Lake, May River and Thornbury operations.
Cenovus says the acquisition would also give it control of Athabasca’s Leismer and Corner oilsands assets, which have more than 75 years of proved and probable reserve life based on estimated 2026 exit production.
The company says those assets provide a path to increase thermal production to about 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,” Cenovus president and CEO Jon McKenzie said.
“Athabasca’s high-quality, long-life assets fit well with our portfolio and provide a clear opportunity to apply our scale and operating expertise to improve performance, grow production and create long-term shareholder value.”
The announcement follows the federal government’s designation of the proposed Pacific Link Pipeline as a project of national interest.
The pipeline is expected to carry about one million barrels of oil per day to Canada’s West Coast, creating additional export capacity for producers seeking greater access to Asian markets.
Cenovus says it plans to apply its steam-assisted gravity drainage expertise to Athabasca’s oilsands assets, with the goal of improving reservoir performance, reducing steam-to-oil ratios and accelerating resource recovery.
The company says it has completed more than 30 oilsands phase expansions to date.
Cenovus also expects about $85 million per year in corporate and commercial synergies from the acquisition, with most of those savings expected during the first full year after closing.
Under the agreement, Athabasca shareholders will receive $12 per share and can elect to take cash, Cenovus shares or a combination of the two, subject to limits on the overall mix of cash and stock.
The transaction is expected to include between 65 and 75 per cent cash and between 25 and 35 per cent Cenovus shares.
Cenovus says the cash portion will be funded through cash on hand and short-term borrowing.
The company expects its year-end 2026 pro forma net debt to be between $5 billion and $5.5 billion following the acquisition.
The boards of both companies have unanimously approved the transaction.
The acquisition is expected to close in December, subject to regulatory approval, customary closing conditions and approval from Athabasca shareholders.
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