Oilsands giant Cenovus Energy Inc. foresees no further wrinkles in its takeover bid for MEG Energy Corp., a day after a shareholder meeting to approve the deal was delayed due to a last-minute regulatory issue.
“The inquiry is associated with a complaint raised by a former employee of MEG who holds approximately 4,000 shares. We do not expect this inquiry to have any impact on the transaction,” Cenovus CEO Jon McKenzie told an analyst conference call Friday to discuss third-quarter results.
He said 86 per cent of MEG shareholders have voted in favour of the deal by proxy or have signalled they intend to do so in person, far exceeding the necessary two-thirds threshold.
“We expect the vote to proceed as planned next week. Cenovus remains resolute in our commitment to this transaction.”
The deal, worth $8.6 billion including assumed debt, is expected to close in November.
Cenovus and MEG have neighbouring steam-driven oilsands operations at Christina Lake, south of Fort McMurray, Alta., and the companies have touted the cost savings and efficiencies that can be achieved by joining forces.
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The deal would add 110,000 barrels of daily oilsands production to Cenovus’ portfolio, bringing it to 720,000 boe/d. Cenovus has said output could grow to 850,000 boe/d in 2028.
MEG accepted the takeover offer from Cenovus in August after spurning a hostile overture months earlier from oilsands peer Strathcona Resources Ltd., which has amassed a 14.2 per cent stake in MEG.
Cenovus has twice sweetened its offer for MEG to get enough shareholder support. Strathcona bowed out of the bidding earlier this month and on Monday pledged its support for the latest Cenovus offer.
Along with the support agreement, Cenovus also announced Monday a deal to sell Strathcona its Vawn thermal heavy oil operation in Saskatchewan and certain undeveloped land in western Saskatchewan and Alberta for $75 million in cash on closing and up to $75 million more depending on future commodity prices.
MEG chairman James McFarland told shareholders Thursday that the regulatory inquiry had to do with disclosures around that transaction.
Earlier Friday, Cenovus reported a third-quarter profit of $1.29 billion, up from $820 million a year ago, as it saw record production.
The profit amounted to 72 cents per diluted share for the quarter ended Sept. 30, up from 42 cents per diluted share a year earlier.
Revenue was $13.20 billion, down from $13.82 billion in the same quarter last year.
Total upstream production for the quarter was 832,900 barrels of oil equivalent per day, up from 771,300 in the third quarter last year.
Refinery throughput totalled 710,700 barrels per day, up from 642,900 a year earlier.
“We’ve largely completed our growth projects and are seeing the benefits of higher production with more to come over the future quarters,” said McKenzie.
He added the company is “blessed with a deep inventory of development opportunities” that can break even with West Texas Intermediate prices below US$45 a barrel. The crude benchmark price is currently hovering around US$60 a barrel.
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