By: Jon Costello
Less than a year after buying MEG Energy, Cenovus Energy (CVE) has agreed to acquire Athabasca Oil (ATH:CA). At first glance, I can see the attraction. Athabasca owns a large oil sands resource base, with years of potential development ahead. But oil in the ground is only part of what Cenovus is buying. It will take time and substantial capital to turn much of it into production. I examined the terms, the cash flow Cenovus can expect, and the price it is paying for those future barrels. For Athabasca shareholders, this looks like a good exit. For Cenovus shareholders, I am much less enthusiastic.