Cenovus Energy CEO ‘not worried’ about Husky deal approval as results disappoint

In this news, we discuss the Cenovus Energy CEO ‘not worried’ about Husky deal approval as results disappoint.

(Reuters) – The chief executive of Cenovus Energy has said he is confident shareholders will approve of its acquisition of rival Husky Energy, despite large quarterly losses and a sale of shares.

Cenovus CVE.TO and Husky HSE.TO lost more money than analysts expected and suffered third-quarter impairment, the companies said Thursday, adding concerns to a $ 3.6 billion merger Canadian funds ($ 2.73 billion) announced a few days earlier.

Cenovus stock fell 6.5% while Husky’s fell 7%, two of the highest percentage declines in the S & P / TSX Composite Index. Cenovus is down 12% since the deal was announced on Sunday, including a massive 8% sell-off on Monday.

The deal requires approval from the shareholders of both companies.

“I’m not very worried,” Cenovus chief executive Alex Pourbaix told Reuters. “What you saw on Monday is that a lot of people with very short term biases came out of the stock. I am very happy to replace these investors with investors with a longer term vision. “

Lockdowns linked to COVID-19 have lowered demand for fuel and added to the woes of Canada’s energy sector, prompting companies to consider consolidations and layoffs.

Len Racioppo, managing director of Coerente Capital Management, a shareholder in Cenovus, said the acquisition of Husky and its refineries had “diluted” the bet he made on rising oil prices by owning Cenovus, which owns mainly production assets.

Husky reported a net loss of C $ 7.08 billion compared to a profit of C $ 273 million a year ago, due to a depreciation of C $ 6.7 billion related to lower long-term price assumptions and reduced capital expenditure

Husky’s loss of 38 cents Canadian per share excluding items was larger than the analysts’ average estimate of 24 cents Canadian, according to Refinitiv IBES.

Excluding items, the loss of 37 cents Canadian per Cenovus share was larger than the expected 6 cents Canadian. It recorded a depreciation of C $ 450 million on an American refinery.

Credit Suisse analysts have said Husky’s struggle to generate free cash flow will weigh on the combined company.

($ 1 = 1.3186 Canadian dollars)

Reporting by Arunima Kumar and Shariq Khan in Bengaluru and Rod Nickel in Winnipeg; Edited by Ramakrishnan M., Alexandra Hudson

Original © Thomson Reuters

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