CALGARY — Cenovus Energy Inc. has gained another boost in its $7-billion takeover bid for MEG Energy Corp., as a second influential proxy adviser has recommended shareholders back the deal over a competing hostile offer from Strathcona Resources Ltd.
Glass Lewis & Co. issued its endorsement Tuesday, days after Institutional Shareholder Services gave its own support. Both firms influence how large institutional investors vote, and their recommendations could sway the outcome when MEG shareholders meet Oct. 9.
Cenovus is offering either $27.25 in cash or 1.325 of its shares for each MEG share. Strathcona’s bid consists of 0.8 of its shares. MEG’s board has already endorsed Cenovus’s proposal, reached in August after running a sales process triggered by Strathcona’s unsolicited approach in May.
A successful deal would hand Cenovus control of MEG’s Christina Lake project, about 150 kilometres south of Fort McMurray. Christina Lake is MEG’s flagship oil sands asset, with regulatory approvals for up to 210,000 barrels per day of production and average output of about 100,000 barrels per day. The site includes cogeneration plants that produce steam and electricity, with surplus power sold into Alberta’s grid. Expansion plans are underway to boost capacity by 25,000 barrels per day by 2027, and the company is pursuing a third processing train that could add another 15,000 barrels per day.
MEG also holds regulatory approvals for its proposed May River project, which could eventually produce 164,000 barrels per day from the McMurray formation, along with additional cogeneration. The company maintains more than 1,000 square kilometres of leases in the Athabasca region for future in situ development, and has a Surmont thermal project in its portfolio that could add up to 120,000 barrels per day if developed.
The Oct. 9 vote will decide whether Cenovus secures MEG’s Fort McMurray-area assets to expand its Alberta oil sands portfolio.
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