Author: Lauren Krugel The Canadian Press

CALGARY – The executive chairman of Strathcona Resources Ltd. says his company aims to join two complementary oilsands players with its unsolicited takeover bid for MEG Energy Corp., but one analyst calls the $5.9 billion being offered an “affront” to shareholders. 

“I am actually not aware of two businesses of any scale in North America that share this level of complementary nature,” Adam Waterous told analysts on a conference call Friday. 

“These are doppelgangers, brothers from another mother … identical twins.”

Strathcona and MEG both extract bitumen using steam-driven techniques in eastern Alberta and don’t have fuel refining or retail businesses like some bigger oilsands players. 

Earlier this week, Strathcona signalled its plans to become a pure-play heavy oil company when it announced the sale of its Alberta shale natural gas operations in three separate deals with a total of $2.84 billion. 

It also said it has bought the Hardisty crude-by-rail rail terminal in Alberta for about $45 million.

A takeover of MEG would further that strategic shift, Waterous said. 

“If someone’s interested in a lower-risk, long-life, low-decline, high-free-cash-flow oil business of scale in North America, we think that this is going to be the business to own.”

Strathcona, which disclosed late Thursday it owns about a 9.2 per cent stake in MEG, said it sent a takeover offer to the MEG board of directors in April, but was rejected earlier this week.

“Strathcona respects the MEG board’s right to dismiss any offer made for MEG, and it has no reason to believe that its decision to dismiss Strathcona’s proposal was not made in good faith,” the company said in a late Thursday news release.

“However, Strathcona believes the benefits of a combination of Strathcona and MEG are significant enough that MEG Shareholders should have the opportunity to decide for themselves.”

MEG said Friday that its board of directors will consider and evaluate the Strathcona offer once it has been received and urged shareholders to take no action until it has made a recommendation.

Strathcona is offering 0.62 of a Strathcona share and $4.10 in cash per MEG share in the proposal worth $23.27 per MEG share based on the closing price of its shares on Thursday.

MEG shares shot higher in late-morning trading Friday, topping the implied value of the takeover offer and suggesting investors believed a higher bid might be possible.

MEG shares were up $3.66 or about 17 per cent at $24.96 in trading on the Toronto Stock Exchange.

Desjardins Securities analyst Chris MacCulloch said Strathcona is offering a “modest” 9.3 per cent premium and competing offers are likely to come from bigger oilsands players like Canadian Natural Resources Ltd., Cenovus Energy Inc., Suncor Energy Inc., Imperial Oil Ltd. or ConocoPhillips. 

“Although we are naturally supportive of further consolidation of the Canadian oilsands to create a stronger and more resilient sector, we view the (Strathcona) takeover offer as an affront to MEG shareholders and highly unlikely to be accepted,” he wrote in a note to clients. 

Strathcona said it is ready to engage with the MEG board and would also support a strategic alternatives process to determine if a superior transaction is available. 

“Strathcona would be willing to participate constructively and in good faith in such a process, including signing a mutual confidentiality agreement to share non-public information, provided it is not required to sign a standstill agreement,” the company said.

Strathcona said a combination with MEG would create Canada’s fifth largest oil producer and fourth largest steam-assisted gravity drainage producer, with among the largest proved oil reserves in North America. 

It said it has identified $175 million in annual synergy opportunities, including $50 million in overhead reduction costs, if the deal goes ahead.

The offer came as Strathcona raised its quarterly dividend and reported a first-quarter profit of $205.3 million or 96 cents per diluted share, up from $100.6 million or 47 cents per diluted share a year earlier.

The company said it will now pay a quarterly dividend of 30 cents per share, up from 26 cents per share.

Oil and natural gas revenue totalled $1.33 billion, up from $1.17 billion in the first quarter of 2024.

Production for the quarter totalled 194,609 barrels of oil equivalent per day for the quarter ended March 31, up from 185,122 a year earlier.

This report by The Canadian Press was first published May 16, 2025.

Companies in this story: (TSX: SCR, TSX: MEG, TSX: SU, TSX: IMO, TSX: CVE, TSX: CNQ)

CALGARY — Shares in oil producer Cenovus Energy Inc. jumped almost 10 per cent Thursday after it reported quarterly profits that beat market expectations, upped its shareholder payout and sought to reassure investors it can withstand oil prices much weaker than they are today.

The stock was trading at $17.90 on the Toronto Stock Exchange in the early afternoon, an increase of 9.9 per cent.

The spike came after Cenovus reported on Thursday its earnings for the first three months of 2025 were $859 million, or 47 cents per share, down from $1.18 billion a year ago, or 62 cents a year earlier.

The mean analyst estimate had been for earnings of 37 cents per share, according to data compiled by LSEG.

Revenue for the quarter amounted to $13.30 billion, up from $13.06 billion a year earlier.

Total production for the three months ended March 31 was 818,900 barrels of oil equivalent per day, up from 800,900 boe/d in the same quarter last year.

Cenovus raised its quarterly dividend two cents to 20 cents per share. During the first quarter, the company returned $333 million to shareholders through dividends. It also bought back $62 million of its own stock during the period, and another $178 million between quarter-end and May 5.

“With the value we see in our shares today and with the capital investment decreasing as we complete our major projects, we see a significant opportunity to increase our returns to shareholders through buybacks going forward and continuing to ensure our balance sheet remains strong,” chief financial officer Kam Sandhar told analysts on a conference call.

Chief executive Jon McKenzie said Cenovus is not putting its balance sheet at risk as it plans share buybacks for the remainder of the year.

“There’s a fine line between discipline and dogma, and when you have opportunities like we have with the share price being where it is, I think it’s incumbent on us to take a look at that, understanding that we have one of the best balance sheets in the business,” he said.

Cenovus said it can continue paying its dividend and sustaining its business with West Texas Intermediate prices at US$45 per barrel. In recent weeks, the key U.S. light oil benchmark has been hovering around US$60, about US$10 lower than where it was just six months ago.

“We continue to progress our growth plans with minimal impact to the business,” McKenzie said.

“This financial discipline coupled with our focus on reducing costs makes Cenovus resilient and durable for the long term and well positioned in any reasonable commodity price scenario.”

Cenovus also said the bulk of this year’s maintenance work at its oilsands plants and U.S. refineries is on track to wrap up by mid-year and that it should be back to more normal production levels for the remainder of 2025.

“With major maintenance activities behind us and production beginning to ramp up, we’re positioned for a very clear runway of strong operating performance in the second half of the year and into 2026,” McKenzie said.

This report by The Canadian Press was first published May 8, 2025.

Companies in this story: (TSX: CVE)

Lauren Krugel, The Canadian Press

CALGARY — Parkland Corp.’s biggest shareholder is going to court after the company announced a US$9.1-billion takeover by Sunoco LP and delayed a meeting where it was to face investors pushing for a boardroom overhaul.

A showdown had been set to take place in Calgary on Tuesday, with shareholders voting on competing director nominee slates put forward by Parkland’s management and by Simpson Oil, which owns just under 20 per cent of the Canadian fuel retailer and refiner’s shares.

“Delaying the meeting and pushing forward with any transaction ahead of board transition represents a clear breach of fiduciary duty — an obvious attempt to cling to power and sidestep shareholder will,” Simpson said in a statement Monday.

Parkland and Cayman Islands-based Simpson have been at odds over the fuel refiner and retailer’s performance and governance for at least a year.

Parkland’s annual meeting has been rescheduled to June 24, when shareholders will vote on the cash-and-stock deal with Dallas-based Sunoco that would create the largest independent fuel distributor in the Americas.

Simpson says it has applied to the Alberta Court of King’s Bench to hold the annual meeting as planned, calling the delay a “deplorable tactic.”

The dissident shareholder called on all 11 incumbent Parkland directors to resign, including executive chair Mike Jennings.

The deal between Parkland and Sunoco announced Monday requires shareholder and regulatory approval and also has to be cleared under the Investment Canada Act. The U.S. company has committed to maintain a Canadian headquarters in Calgary, significant employment in Canada and investment in Parkland’s refinery in Burnaby, B.C.

Parkland owns the Ultramar, Chevron and Pioneer gas station chains as well as several other brands in 26 countries. Sunoco outlets that had long operated in Canada were rebranded in 2009 under the Petro-Canada banner.

“This combination with Sunoco provides Parkland’s shareholders with the highest value and the greatest proceeds, while also affirming Sunoco’s and Parkland commitment to Canada, a country that has played a vital role in our combined history,” said outgoing Parkland chief executive Bob Espey, who announced last month that he would step down before year-end.

On a conference call, an analyst asked Sunoco CEO Joe Kim about potential issues with large Parkland shareholders, but did not name Simpson specifically.

“For the Parkland shareholders, you get a very, very healthy premium, material cash and a stronger company underlying the equity going forward,” Kim replied.

“So we think this is an offer that’s going to be hard for people to pass up.”

Under shareholder pressure, Parkland said in March it would review options to boost its share price, including a sale of the entire company, an action it had earlier said was unnecessary.

Simpson has criticized Parkland for rejecting a potential acquisition at a “material premium” in 2023. The Globe and Mail has reported it was from Sunoco and worth $45 a share.

As part of the deal Monday, Sunoco intends to form a new publicly traded company named SUNCorp LLC that will hold limited partnership units of Sunoco that are economically equivalent to Sunoco’s publicly traded common units.

Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 for each Parkland share. Parkland shareholders may also elect to receive C$44 per Parkland share in cash or 0.536 SUNCorp units for each Parkland share, subject to proration limits. The deal will also see Sunoco assume Parkland’s debt.

Parkland shares closed at C$36.28 on the Toronto Stock Exchange on Friday. Its shares rose more than seven per cent to C$39.86 in late-morning trading.

Parkland and Simpson’s relationship dates back to 2017, when Simpson subsidiary Sol, the largest independent fuel marketer in the Caribbean, bought Parkland shares.

In early 2019, Parkland closed a deal to buy a 75 per cent stake in Sol for $1.6 billion. Through the deal, Sol got a 10 per cent stake in Parkland.

Parkland gained full ownership of Sol in 2022 and Simpson upped its stake in Parkland to about 20 per cent, making it the largest shareholder.

At the time the founder of Simpson, Sir Kyffin Simpson, had glowing words for Parkland and Espey.

“We have tremendous confidence in the company, its management team and its bright future,” he said in August 2022.

Three years later, Simpson says on its Refuel Parkland website that the elements that first attracted it to the partnership have been “mismanaged out of existence.”

This report by The Canadian Press was first published May 5, 2025.

Companies in this story: (TSX:PKI)

Lauren Krugel, The Canadian Press

CALGARY — Parkland Corp.’s biggest shareholder is going to court after the Calgary company announced a US$9.1-billion takeover by Sunoco LP and delayed a meeting where it was to face down investors pushing for a boardroom overhaul.

A showdown had been set to take place in Calgary on Tuesday, with shareholders voting on competing director nominee slates put forward by Parkland’s management and by Simpson Oil, which owns just under 20 per cent of the Canadian fuel retailer and refiner’s shares.

Parkland and Cayman Islands-based Simpson have been at odds over the fuel refiner and retailer’s performance and governance for about a year.

Parkland’s meeting has been rescheduled to June 24, when Parkland shareholders are to vote on a cash-and-stock deal with Dallas-based Sunoco that would create the largest independent fuel distributor in the Americas.

Simpson says it has applied to the Alberta Court of King’s Bench to hold the annual meeting as planned, calling the delay a “deplorable tactic” and a bid to “cling to control” by the existing board.

Simpson says no action should have been taken under a new board of directors supported by shareholders was in place.

“Delaying the meeting and pushing forward with any transaction ahead of board transition represents a clear breach of fiduciary duty — an obvious attempt to cling to power and sidestep shareholder will,” Simpson said in a statement Monday.

Simpson is calling on all 11 incumbent Parkland directors to resign immediately, including executive chair Mike Jennings.

The cash-and-stock deal between Parkland and Sunoco announced Monday requires shareholder and regulatory approval and also has to be cleared under the Investment Canada Act. The U.S. company has committed to maintain a Canadian headquarters in Calgary, significant employment in Canada and investment in Parkland’s refinery in Burnaby, B.C.

“This combination with Sunoco provides Parkland’s shareholders with the highest value and the greatest proceeds, while also affirming Sunoco’s and Parkland commitment to Canada, a country that has played a vital role in our combined history,” said outgoing Parkland chief executive Bob Espey.

“Sunoco is a strong organization and clearly the right choice for Parkland.”

Espey, who had been at the helm for 17 years, announced earlier this month that he would step down before year-end.

Under shareholder pressure, Parkland said in March it would review options to boost its share price, including a sale of the entire company, an action it had earlier said was unnecessary.

As part of the deal, Sunoco intends to form a new publicly traded company named SUNCorp LLC that will hold limited partnership units of Sunoco that are economically equivalent to Sunoco’s publicly traded common units.

Parkland shareholders will receive 0.295 SUNCorp units and C$19.80 for each Parkland share. Parkland shareholders may also elect to receive C$44 per Parkland share in cash or 0.536 SUNCorp units for each Parkland share, subject to limits. The cash-and-stock deal also includes Parkland’s assumed debt.

Parkland shares closed at C$36.28 on the Toronto Stock Exchange on Friday. Its shares rose more than seven per cent to C$39.86 late morning on the TSX.

This report by The Canadian Press was first published May 5, 2025.

Companies in this story: (TSX: PKI)

Lauren Krugel, The Canadian Press