Canada’s Cenovus to buy Husky for $2.9 billion as pandemic drives oil mergers

(Reuters) – Cenovus Energy Inc CVE.TO has agreed to buy rival Husky Energy Inc HSE.TO in an all-stock deal valued at C$3.8 billion ($2.9 billion) to create Canada’s No. 3 oil and gas producer, as a pandemic-driven collapse in demand forces the industry to consolidate. The combination, announced on Sunday, follows recent big deals in the United States. Concho Resources Inc CXO.N agreed this month to a takeover by ConocoPhillips COP.N for $9.7 billion. That followed Chevron Corp’s CVX.N $4.2 billion purchase of Noble Energy. The collapse in fuel demand during pandemic lockdowns has put additional pressure on companies in Canada, the fourth-largest global oil producer, forcing them to cut costs. They have been under stress for six years, dating back to the last downturn, due to congested pipelines and the flight by foreign oil companies and investors from Canada’s high production costs and emissions. Consolidation makes the Canadian industry leaner and lowers costs, said Jackie Forrest, executive director at the ARC Energy Research Institute, adding that deal-making is likely just getting started. The deal makes Cenovus an integrated producer with refineries in Canada and the United States, adding to their existing half-ownerships in two U.S. refineries. Acquiring refineries, pipelines and storage offered a solution to Canada’s often-congested pipelines,… continue reading

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Source: CTRM Center

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