SeaRose FPSO; Source: Husky Energy Cenovus

Cenovus completes merger with Husky Energy

Canadian oil firms Cenovus and Husky Energy have closed their previously announced merger, creating Canada’s third-largest oil and gas player.

SeaRose FPSO; Source: Husky Energy

Cenovus said on Monday that its strategic combination with Husky Energy has closed. The transaction was completed through a definitive arrangement agreement announced on 25 October 2020 under which the two companies agreed to combine in an all-stock transaction.

Per the transaction agreement, 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.

The company also stated that 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 and New York Stock Exchange under the ticker symbol CVE. Husky common shares and preferred shares are expected to be delisted by the TSX at the close of market on Tuesday, 5 January 2021.

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Following the close of the transaction, Husky has become a wholly-owned subsidiary of Cenovus and will remain as such until the 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.

Alex Pourbaix, Cenovus president and CEO, said: “This is an exciting day for [the company] 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.

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”.

The combination creates Canada’s third-largest crude oil and natural gas producer, based on total company production, with about 750,000 boepd of oil and natural gas production. Cenovus is also now the second-largest Canadian-based refiner and upgrader, with total North American upgrading and refining capacity of approximately 660,000 barrels per day.

It is worth noting that both Cenovus and Husky made commitments to achieve net-zero emissions by 2050 and new plans and targets will be set for the combined company later this year.

To remind, Cenovus decided to cut between 20 and 25 per cent of its workforce after the acquisition of Husky Energy. The estimated job losses could total about 2,150, based on the size of their workforces, including contractors – most in Calgary. It is still unclear when the cuts will take place.