MEG Energy Corp. has postponed its shareholder vote regarding a proposed acquisition by Cenovus Energy Inc. The decision comes after a meeting led by MEG board chair James McFarland, which included a last-minute regulatory inquiry. The meeting will reconvene on November 6, marking another chapter in the ongoing takeover saga.
Cenovus Deal: MEG Meeting Delayed Another Week
This delay is part of a contentious takeover battle between Cenovus Energy and smaller competitor Strathcona Resources Ltd. Strathcona, which initially presented an all-stock offer, withdrew its bid earlier this month. However, they have pledged to support Cenovus’s revised offer, leveraging their 14 percent stake in MEG.
Recent Developments in the Takeover Process
- Cenovus has announced a deal to sell its Vawn thermal heavy oil operation in Saskatchewan and other undeveloped land to Strathcona. The transaction is valued at $150 million, comprising $75 million in cash at closing and contingent payments up to $75 million based on future commodity prices.
- The ongoing negotiations follow MEG’s board deeming Strathcona’s initial offer as opportunistic. Strathcona later accused MEG of complacency and not properly engaging in discussions.
- In August, MEG’s board accepted a friendly takeover proposal from Cenovus, leading Strathcona to revise its own offer to enhance its attractiveness to investors.
Impact on Production and Future Growth
If approved, the Cenovus deal would boost its oilsands production by 110,000 barrels daily, elevating its total to 720,000 barrels of oil equivalent per day (boe/d). Cenovus projects future output could increase to 850,000 boe/d by 2028.
Both companies own adjacent oilsands assets at Christina Lake, located south of Fort McMurray, Alberta. They have highlighted the efficiencies and cost savings that could result from the merger.
The situation continues to evolve as stakeholders monitor the developments in this intricate acquisition process.
