Strathcona Resources has made a $4.25 billion offer to acquire MEG Energy, aiming to create one of Canada’s largest oil sands producers, according to Reuters calculations. The bid includes cash and stock and offers a 9.3% premium to MEG Energy’s closing share price on Thursday.
In a statement, Strathcona said the merger would bring together two heavy oil producers, each producing over 100,000 barrels per day and specializing in steam-assisted gravity drainage (SAGD) oil sands operations. Both companies have similar operating margins and reserve life, the company noted.
If completed, the acquisition would make the combined company the fourth-largest oil sands producer using SAGD technology and the fifth-largest oil company in Canada overall. Strathcona also said the merger would help the company secure an investment-grade credit rating.
The company expects to save around $125 million (C$175 million) per year from the deal. These savings would come from operating synergies, reduced overhead, and lower interest expenses.
The acquisition bid follows Strathcona’s recent move to sell its assets in the Montney formation for a total of $2.84 billion. The largest deal in that exit was the $1.7 billion sale of the Kakwa asset to ARC Resources. The divestment signals Strathcona’s shift toward a more focused strategy on oil sands production.
Before making the offer, Strathcona had quietly built a 9.2% stake in MEG Energy through open-market share purchases.
In the first quarter of the year, Strathcona reported production of 194,600 barrels of oil equivalent per day and an operating profit of C$322.4 million (around $231 million).
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