Canadian oil firms Cenovus Energy and Husky Energy said Monday their previously announced strategic merger had closed, creating Canada’s third-largest crude oil and natural gas producer.
"The transaction creates a resilient integrated energy leader that is well-positioned to provide superior returns for investors over the long term, as well as strong environmental, social and governance (ESG) performance," Cenovus said.
The transaction was completed through a definitive arrangement agreement announced on October 25, 2020 under which Cenovus and Husky agreed to combine in an all-stock transaction.
Husky common shareholders received 0.7845 of a Cenovus common share and 0.0651 of a Cenovus common share purchase warrant in exchange for each Husky common share. In addition, Husky preferred shareholders exchanged each Husky preferred share for one Cenovus preferred share with substantially identical terms.
Cenovus common shares remain listed on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the ticker symbol CVE. The Husky common shares and preferred shares are expected to be delisted by the TSX at the close of the market on January 5, 2021.
With the close of the transaction, Husky has become a wholly-owned subsidiary of Cenovus and will remain as such until completion of a planned amalgamation among the two entities. Upon amalgamation, Cenovus will become the obligor under Husky’s existing long-term notes and other direct obligations. The combined company will continue to be headquartered in Calgary.
“This is an exciting day for Cenovus as we become a leaner, stronger, more fully integrated oil and natural gas company that is exceptionally well-positioned to weather the current environment and be an energy leader in the years ahead,” said Alex Pourbaix, Cenovus President & Chief Executive Officer.
“With the closing of this transaction, we will focus on safely and efficiently integrating the assets and teams of these two great companies while working to realize the $1.2 billion in synergies we’ve identified. These cost and capital efficiencies, combined with our strong portfolio of well-matched upstream production, midstream, and downstream assets as well as improved financial strength, are expected to generate strong value for our shareholders, Pourbaix said.
The combination creates Canada’s third-largest crude oil and natural gas producer, based on total company production, with about 750,000 barrels of oil equivalent per day (BOE/d) of oil and natural gas production.