Strathcona, controlled by former investment banker Adam Waterous, is now offering 0.8 of a share for each share of MEG. That would value the Calgary-based target at around C$7.8 billion ($5.7 billion), based on Friday’s close. The new price is about 10% higher than Strathcona’s original takeover bid and tops the price Cenovus agreed last month to pay for MEG.
The Montney formation in Western Canada spans Alberta and British Columbia is one of the largest natural gas deposits on the continent. Currently, the Montney shale produces some 2 million barrels of oil equivalent daily. A lot of this is gas, and even more will be gas once LNG Canada begins operation, with the launch scheduled for later this year. Indeed, the launch of the project is leading to growing interest in the play, which also has some rather solid crude oil resources—and some of the lowest production costs in the industry.