Cenovus Energy is to buy rival Canadian oil producer Husky Energy, controlled by Hong Kong billionaire Li Ka-shing, in a $C10.2 billion ($10.9 billion) deal as the wave of consolidation sweeping North America’s battered oil and gas sector gathers speed.
The new company will be worth $C23.6 billion, Cenovus said, making it Canada’s third-largest oil and gas producer with an output of 750,000 barrels a day concentrated in the bitumen-rich oil sands of northern Alberta, the biggest single source of US crude imports.
Two entities controlled by Li Ka-shing, which own about 70 per cent of Husky at present, will emerge with more than 27 per cent of the new company’s common stock. Bloomberg
The transaction is the latest in a string of North American oil mergers as operators seek to consolidate and cut costs. The largest came last week when ConocoPhillips agreed to buy Concho Resources in a deal worth $US9.7 billion ($13.6 billion), marking another big bet on the future of US shale.
Other recent deals include the $US7.6 billion takeover of US shale group Parsley Energy by Pioneer Natural Resources, Chevron’s $US13 billion plan to buy Noble Energy and Devon Energy’s $US12 billion deal to combine with rival WPX Energy.
The plummeting oil price has caused shares in Cenovus to fall by more than 60 per cent since the start of January, and Husky’s by almost 70 per cent.