Cenovus CEO defends $17.7B ConocoPhillips deal

CALGARY — A $17.7-billion megadeal to buy most of the Canadian assets of ConocoPhillips will make Cenovus Energy Inc. (TSX:CVE) a “better and stronger company,” CEO Brian Ferguson said Wednesday in a staunch response to the deal’s critics.

Calgary-based Cenovus’s share price has fallen more than 20 per cent since the acquisition was announced March 29 and an investor, Toronto-based Coerente Capital Management, has asked the Ontario Securities Commission to halt the deal.

Coerente wants to put the decision to a shareholder vote because it dilutes the existing shareholders’ float by more than 25 per cent.

But Ferguson said Wednesday morning on a conference call with analysts and later at the company’s annual meeting that the price and structure of the deal are appropriate.

“I believe it is the right transaction for us and that we have structured the transaction in the right way to maintain our financial strength,” he said on the call.

“I don’t know specifically what’s been asked of the Ontario Securities Commission but I would just emphasize that the transaction was undertaken in full compliance with all securities regulations.”

At the company’s annual meeting on Wednesday afternoon in Calgary, shareholders voted more than 87 per cent in favour of reelecting the board of directors, a result Ferguson interpreted as a vote of confidence.

Of three shareholders who spoke, only one said that Cenovus should have held a shareholder vote on the ConocoPhillips deal.

Cenovus chairman Michael Grandin responded that the “once in a lifetime” opportunity could have been lost if word of the deal had leaked out before financing and terms were finalized.

Cenovus is buying Houstonbased ConocoPhillips’s 50 per cent interest in the FCCL Partnership, an oilsands venture between the two companies in northern Alberta, as well as most of its Deep Basin conventional assets in Alberta and British Columbia.