Cenovus is Paying a Scarcity Premium for Acquiring Athabasca Oil
Dow Jones10-05 22:38
1038 ET - Cenovus Energy is paying a fuller price for Athabasca Oil, but the cost of scaling up is likely worth it, according to TD Cowen's Menno Hulshof. In a report, the analyst says the company is paying a premium for "growth, resource depth and synergy potential." He says that the deal consolidates scalable thermal resources around Cenovus' Christina Lake area operations, with around C$85 million in synergies identified, which "CVE's upstream operating expertise could drive upside beyond." While the C$5.7 billion price tag is higher, Hulshof calls the cost inevitable "given it is one of the last remaining thermal plays and arguably carries a scarcity premium."
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