Cenovus Raises Offer for MEG Energy as Record Output Boosts Momentum

By Charles Kennedy - Oct 09, 2025

Cenovus Energy (TSX: CVE; NYSE: CVE) has sweetened its offer to acquire MEG Energy (TSX: MEG), increasing the deal value to approximately C$29.80 per share and adjusting the mix to an even split of cash and stock, while also reporting record third-quarter production and throughput across its operations.

Under the amended agreement announced Wednesday, MEG shareholders can now choose to receive either C$29.50 in cash or 1.240 Cenovus shares per MEG share, subject to proration limits of 50% cash and 50% equity. The revised offer represents an increase of about C$1.32 per MEG share over the previous terms and reflects Cenovus’s final bid for the company.

Cenovus said the move comes after feedback from major MEG shareholders who wanted greater exposure to the combined entity’s upside. The company also secured approval from both the Canadian Competition Bureau and the U.S. Federal Trade Commission, clearing key regulatory hurdles for the deal.

As part of the revised structure, Cenovus may purchase up to 9.9% of MEG’s outstanding shares before the shareholder vote and intends to back the transaction with any acquired stock. The special meeting for MEG shareholders has been postponed to October 22, 2025, to allow time for consideration of the new offer.

If approved, Cenovus plans to ramp up share buybacks due to the lower maximum cash component, aligning with its broader capital return strategy. The company has already repurchased 40.4 million of its own shares in Q3 for C$900 million, averaging C$22.31 per share.

Cenovus reported record upstream production of 832,000 BOE/d in Q3, including 640,000 bbl/d from its oil sands operations, and downstream throughput of 712,000 bbl/d, with U.S. refining utilization reaching 98.8%. The company also completed the sale of its 50% stake in WRB Refining LP to Phillips 66 for C$1.8 billion, cutting net debt to about C$3.5 billion post-closing.

Major projects are advancing as planned, with output ramping up at Narrows Lake, and first oil expected from Foster Creek Optimization in early 2026 and West White Rose in Q2 2026.

The revised bid underscores Cenovus’s determination to consolidate Canada’s oil sands sector and achieve synergies through scale and integration. The MEG acquisition would expand Cenovus’s heavy oil portfolio, particularly in the Christina Lake region, and reinforce its position as one of North America’s largest integrated oil producers.

Cenovus’s move to enhance its offer amid robust operational performance signals confidence in the long-term value of its assets and the strategic fit of MEG’s production base within its portfolio.

By Charles Kennedy for Oilprice.com