MEG Energy (TSX: MEG) has again seen the transaction with Cenovus Energy (TSX: CVE) amended, this time following the receipt of support from Strathcona Resources (TSX: SCR). The revised transaction will see share shareholders now receive increased consideration, while Cenovus has agreed to sell certain assets to Strathcona as part of the transaction to get the deal across the finish line.
The revised terms of the arrangement will now see MEG shareholders receive $30.00 per share in compensation from Cenovus, which represents a 47% premium to the 20 day volume weighted average price of MEG as of May 15. The figure also represents a $0.43 per share increase in value relative to the prior offer.
Compensation under the arrangement is to consist of cash and shares, with Cenovus indicating it intends to issue up to 159.6 million shares and deploy $3.8 billion cash under the transaction, with compensation expected to be pro rated.
Cenovus meanwhile has agreed to sell to Strathcona its Vawn thermal heavy oil assets in Saskatchewan, alongside certain undeveloped lands in western Saskatchewan and Alberta for $150 million.
The assets currently have existing production amounting to 5,000 barrels of oil equivalent per day. Consideration is to consist of $75 million in cash paid upon closing and up to $75 million in contingent consideration. Strathcona in turn will vote it’s 14.2% interest in MEG in favor of the transaction with Cenovus.
MEG Energy last traded at $28.87 on the TSX.
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