Senoboth Energy Merges with Husky... Jumps to 3rd Place in Canada
[Asia Economy Reporter Jeong Hyunjin] A wave of mergers and acquisitions (M&A) is sweeping through the Canadian energy industry. Due to the decline in international oil prices and the impact of the novel coronavirus disease (COVID-19), mergers are taking place among Canadian oil and natural gas producers.
On the 25th (local time), according to Bloomberg News and others, Canadian oil company Cenovus Energy announced that it will merge with Husky Energy, a Canadian oil company in which Hong Kong tycoon Li Ka-shing holds shares. Once the merger process is completed, the new company will become the third-largest oil and natural gas producer in Canada, following Canadian Natural and Suncor Energy.
The merger will take the form of a stock transaction worth 3.8 billion Canadian dollars (approximately 3.26 trillion Korean won), with current Cenovus shareholders holding 61% of the merged company’s shares and Husky shareholders owning the remaining shares. Robert Peabody, CEO of Husky Energy, stated, "The merged company will be much more resilient," and pledged to rapidly reduce debt.
The two companies have been negotiating since this spring. They faced difficulties in raising funds even before COVID-19, and with the sharp drop in international oil prices and the collapse in crude oil demand due to the pandemic, operations became challenging. There were also many concerns about the large scale of debt that needed to be resolved.
This trend has already been underway in the U.S. shale industry. Earlier, U.S. shale company Pioneer Natural Resources announced it would acquire Parsley Energy for 4.5 billion dollars (approximately 5.1 trillion Korean won). On the 19th, ConocoPhillips announced an agreement to acquire shale oil company Concho Resources for 9.7 billion dollars.
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