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Cenovus closes transaction to combine with Husky

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Tanks and Terminals,

Cenovus Energy Inc. has announced that its combination with Husky Energy Inc. has closed. The transaction creates a resilient, integrated energy company that is well positioned to provide returns for investors over the long term, as well as strong environmental, social and governance (ESG) performance.

The transaction was completed through a definitive arrangement agreement announced on 25 October 2020 under which Cenovus and Husky agreed to combine in an all-stock transaction. Pursuant to the transaction agreement, Husky common shareholders received 0.78 of a Cenovus common share and 0.07 of a Cenovus common share purchase warrant in exchange for each Husky common share. In addition, Husky preferred shareholders exchanged each Husky preferred share for one Cenovus preferred share with substantially identical terms.

With the close of the transaction, Husky has become a wholly owned subsidiary of Cenovus and will remain as such until completion of a planned amalgamation among the two entities. Upon amalgamation, Cenovus will become the obligor under Husky’s existing long-term notes and other direct obligations. The combined company will continue to be headquartered in Calgary.

“This is an exciting day for Cenovus as we become a leaner, stronger, more fully integrated oil and natural gas company that is exceptionally well-positioned to weather the current environment and be an energy leader in the years ahead,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “With the closing of this transaction, we will focus on safely and efficiently integrating the assets and teams of these two great companies while working to realise the US$1.2 billion in synergies we’ve identified. These cost and capital efficiencies, combined with our strong portfolio of well-matched upstream production, midstream and downstream assets as well as improved financial strength, are expected to generate strong value for our shareholders.”

Based on total company production, the combination will create a crude oil and natural gas producer with about 750 000 bbl of oil equivalent/d of low-cost oil and natural gas production. Cenovus also has a total North American upgrading and refining capacity of approximately 660 000 bbl/d. In addition, the company has access to about 265 000 bbl/d of current takeaway capacity from Alberta on existing major pipelines, 305 000 bbl/d of committed capacity on planned pipelines and 16 million bbl of crude oil storage capacity as well as strategic crude-by-rail assets that provide takeaway optionality.

Both Cenovus and Husky have an ongoing commitment to transparent performance reporting, an ambition to achieve net zero emissions by 2050 and a plan to set ambitious new ESG targets for the combined company later this year.

“I want to thank and congratulate everyone at Cenovus and Husky for their dedication and hard work in bringing this transaction to a successful conclusion,” Pourbaix said. “This is truly one of the most significant developments in the history of our two companies, and in the history of the Canadian energy industry, for that matter.”

Cenovus expects to provide additional details on its future plans with the release of its 2021 capital budget and updated corporate guidance in late January. Fourth quarter and year-end financial and operating results for both Cenovus and Husky Energy are scheduled for release in mid-February.

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