Cenovus buying Husky Energy for $3.8 billion
Cenovus Energy Inc. shook up Canada’s oil and gas industry over the weekend with a blockbuster agreement to buy Husky Energy Inc. in an all-stock $3.8-billion takeover.
The deal makes the combined entity Canada’s third-largest oil and gas producer, trailing only Canadian Natural Resources Ltd. and Suncor Energy.
Here’s a round-up of reaction from industry players and investors on the latest major move in the Canadian oil patch.
“The challenge is always being able to demonstrate you got it right; that, in fact, the value is there, and that you can realize on that value, sooner or later. I have to be candid: I think that Husky’s assets, some of them are really good and some of them aren’t. That’s typical of companies, but I think that what [Cenovus] really have to do is figure out which is which and capitalize on those going forward. Some of those that aren’t may fit better somewhere else, but it’s always a challenge. When you make a deal like this, it’s as the old saying goes from Missouri: You have to ‘show me,’ and it’s up to them to do that.”
- Gwyn Morgan, former chief executive officer of Encana Corp.
“[Husky] has some refineries that are located on the Enbridge system in the U.S. Midwest, and the nature of the Enbridge system is if you have refineries at the far end of the pipe, you’re advantaged in terms of bidding for capacity on that pipe system. The pipe capacity that Husky brings to the table is interesting but the real driver is the fact that they have the Lima, (Oh.), Toledo and Superior, (Wisc.) refineries in the Midwest U.S. That is what I would see as the real upside of the integration, combining Western Canadian heavy production with refineries that are ideally suited to process that.”
- Hal Kvisle, Cenovus director and former CEO of TransCanada Corp.
“It’s non-overlapping to a degree, when you talk about [Husky’s] Asian light crude that’s off-shore. That’s totally different than where they normally are. But, everything else seems to fit within the image of a company that is going to become a super-integrated oil producer in Canada over time. I’m not too fussed about meshing that together. But, this anomalous production, which happens to represent a large amount of the revenue that Husky generates today, so it gets a lot of attention, does look weird. So, messaging will be critical over the next couple weeks.”
- Rafi Tahmazian, senior portfolio manager, Canoe Financial