MEG Energy's Earnings Overshadowed by Takeover Talks with Cenovus Energy.

MEG Energy Corp. is in "defence mode" as takeover talks overshadow its quarterly earnings. Cenovus Energy Inc. is reportedly seeking financing for a potential bid for MEG, while MEG declined to comment on the report. The Canadian oilsands producer will release its results Thursday, with a conference call scheduled for Friday. A former MEG executive said Cenovus would be unlikely to make a formal bid without the expectation of MEG's board support.

MEG Energy Corp. is bracing for a potential hostile takeover bid as it prepares to release its quarterly earnings. The oilsands producer is in "defence mode," with Cenovus Energy Inc. reportedly seeking financing for a potential counteroffer. Meanwhile, MEG has declined to comment on the report, setting a deadline for alternative bids. The Canadian company is expected to report its results on Thursday, with a conference call scheduled for Friday.

A former MEG executive, who wished to remain anonymous, suggested that Cenovus would be unlikely to make a formal bid without the support of MEG's board. The executive noted that MEG is likely to give its support if it feels there is a risk of losing the company. The board is reportedly considering either accepting a competing bid or negotiating with Strathcona Resources Ltd. for a higher offer.

Cenovus and MEG share adjacent oilsands operations at Christina Lake in northeastern Alberta, which could lead to significant efficiency gains and cost savings if the companies were to combine. However, analysts and investors have expressed skepticism about Cenovus's ability to mount a rival bid due to its ongoing spending program to boost production and improve performance at its U.S. refining operations.

Cenovus is expected to deliver weaker second-quarter results on Thursday, partly due to lower oil prices and production cuts from wildfires and planned maintenance. The company had previously downplayed the possibility of joining the fray for MEG but hosted an in-person technical presentation on its upstream operations for analysts and investors earlier this month, which was seen as an attempt to "warm up the street" to the possibility of a bid.

Strathcona Resources Ltd., the company that initiated the hostile bid, has offered a combination of 0.62 of one of its shares and $4.10 in cash for each MEG share it doesn’t already own. The implied value of this offer has increased since May, reaching $25.77 per share at the close on Tuesday, representing a premium of roughly 21% over the pre-bid share price.

MEG has urged shareholders to reject the Strathcona bid, citing concerns about inferior assets and capital market risk. The company has launched a sales process to review its options and invite competing bids, with a deadline set for Monday. If Strathcona's bid fails, the company could still benefit from a potential increase in the value of its stake in MEG in response to a rival bid.

References:
[1] https://financialpost.com/commodities/energy/oil-gas/meg-energy-defence-mode-takeover-overshadows-earnings-oilsands
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L8N3TQ1LH:0-cenovus-energy-inc-expected-to-post-earnings-of-14-cents-a-share-earnings-preview/
[3] https://globalnews.ca/news/11304899/meg-energy-takevoer-bids-cenovus/