Cenovus revises terms of MEG Energy acquisition and sells assets to Strathcona

Cenovus Energy Inc. has modified the terms of its agreement to acquire MEG Energy Corp., now offering MEG shareholders the option to choose between an all-cash payment or a share exchange. The revised structure includes a maximum of CAD3.8bn ($2.74bn) in cash and up to 159.6 million Cenovus shares, for a total value of $30 per MEG share based on Cenovus’s closing price on October 24.

Each MEG shareholder can elect to receive either $30 in cash or 1.255 Cenovus shares, subject to a pro-rata adjustment ensuring a 50% cash and 50% share distribution. On a fully prorated basis, this corresponds to $15 in cash and 0.6275 Cenovus share per MEG share.

Strategic support from Strathcona

Strathcona Resources Ltd. has signed a voting support agreement in favour of the transaction, committing to vote its MEG shares to approve the deal. This commitment remains valid until the transaction is either completed or terminated. The MEG shareholder vote is scheduled for October 30, with a proxy submission deadline set for October 29.

Alongside this announcement, Cenovus confirmed it has reached an asset sale agreement with Strathcona for total proceeds of up to CAD150mn ($108mn). The transaction includes an upfront payment of CAD75mn ($54mn) and a contingent amount of the same value, dependent on future commodity prices.

Thermal asset divestment in Canada

The assets involved include the Vawn thermal heavy oil site in Saskatchewan, along with undeveloped lands in western Saskatchewan and Alberta. In 2025, these assets produced an average of 5,000 barrels of oil per day. The deal is expected to close in the fourth quarter of the year.

The revised acquisition terms, combined with the partial divestiture of assets, allow Cenovus to optimise its portfolio while securing the support of a key industry player. The mixed structure of the deal aims to balance potential shareholder dilution with the need to preserve liquidity amid oil market volatility.