It was fun seeing many old friends at this year’s IMAGE 2025 meeting, still ongoing in Houston this week. IMAGE is one of the biggest gathering of geologists and geophysicists working in the oil and gas industry, organized by AAPG and SEG.
It was nice to see the fan favorite English golfer Tommy Fleetwood win the big FedEx Cup and his first PGA title after 164 tries.
BTW, AAPG has a brand new website you should visit (AAPG.org).
Shangyou Nie
Editor, Well Read
Cenovus Buys MEG Energy for $5.7 Billion in Canada
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Cenovus Energy, Canada’s third largest oil/gas company, announced last Friday that it had entered into a definitive agreement to acquire fellow Canadian company MEG Energy for $5.7 billion. This cash and stock transaction will build the biggest oil sands producer.
About the deal:
The acquisition price is Canadian $7.9 billion, or $5.7 billion USD, including debt.
The offer will be paid for with 75 percent cash and 25 percent of Cenovus shares.
Cenovus will finance the deal with CA$2.7 billion term loan and CA$2.5 billion bridge facility.
The deal is expected to close in Q4 this year, subject to regulatory and shareholder approvals.
According to the WSJ, Alberta-based Strathcona Resources attempted to buy MEG in May this year for Canadian $6 billion, which was rejected by MEG.
Cenovus’ offer represents a 33 percent premium over MEG’s share price in May.
Cenovus says that it will achieve CA$150 million synergy savings in 2026, which will grow to >CA$400 million by 2028.
About the buyer:
Cenovus has a market cap of $29.5 billion, and its share price increased by 4 percent upon the news of the merger.
Cenovus is the third largest Canadian oil company after Canadian Natural Resources (market cap $65 billion) and Suncor (market cap $48.5 billion).
Cenovus is already the industry leader in Steam-Assisted Gravity Drainage (SAGD) oil production with close to 600,000 barrels per day, more than twice the closest competitor.
The Trans Mountain pipeline increased its delivery capacity from 300,000 barrels per day to 890,000 barrels per day, to send Alberta oil to the Pacific coast and Asian customers.
Canada is the world’s fourth largest oil producer after the United States, Saudi Arabia, and Russia.
It produced 5.4 million barrels per day in December 2024 and is set to grow its production to 5.6 million barrels per day by December 2025.
What they're saying:
“The magnitude of synergies … makes this a compelling value creation opportunity for Cenovus shareholders,” and “we look forward to leveraging our combined expertise and scale to drive additional value for many years to come,” said Cenovus’ press release.
“(MEG’s) Special Committee, with the support of its financial and legal advisors, conducted a comprehensive review of all available alternatives to maximize value,” said James McFarland, MEG Board Chairman.
“After considering the Strathcona unsolicited offer, engaging with multiple parties on proposals, and assessing them against MEG’s standalone plan, (MEG) unanimously concluded that the proposed transaction with Cenovus represents the best strategic alternative,” added McFarland.
You can see the full slide pack from Cenovus on the merger here.
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Meta to Build Three Gas Power Plants with Entergy for the World’s Largest Data Center in Louisiana
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Entergy Corporation received approval last week from the Louisiana Public Service Commission to build three gas power plants to serve the energy needs of Meta Platform Inc.’s biggest data center. The power plants will cost around $3.2 billion to build, and the data center will cost $10 billion.
About the data center:
According to Bloomberg, Meta’s latest data center will be its largest, to be based in Richland, Louisiana.
It will be located in Richland, some 260 miles northwest of New Orleans, 40 miles west of the Mississippi River.
Meta acquired 2,700 acres of farmland in 2024.
It is close to the Haynesville basin with large shale gas resources.
According to the WSJ, Richland Parish has about 20,000 residents, a quarter of whom live in poverty.
Mark Zuckerberg called the project “Hyperion” and a “supercluster” that will be key in Meta’s pursuit of “superintelligence.”
When in full operation, the data center will consume up to 5 gigawatts of electricity per year.
Meta said that it will work with Entergy to help cover the cost of the project rather than shifting the burden to grid customers.
Meta plans to add enough clean and renewable energy to the grid to match the total electricity use of the data center.
About Entergy:
Entergy has its headquarters in New Orleans.
Entergy originated in 1913 in Arkansas.
It is a power company supplying electricity to four southern states of Arkansas, Louisiana, Mississippi, and Texas.
As of the end of 2024, Entergy has a total capacity of 24 Gigawatts, including Combined cycle combustion turbines (CCCT) (43 percent), legacy oil/gas (25 percent), nuclear (21 percent), coal (8 percent), and renewables (3 percent).
Entergy is traded on the NYSE with a market cap of $40 billion.
Its share price has grown 34 percent in the past year.
Louisiana’s fast approval:
The Louisiana Public Service Commission accelerated the approval of the project.
Entergy argued that permit delays might lead to Meta choosing to build the data center in a different state.
What they're saying:
“I’d argue it’s probably the most important project we’ve undertaken,” said Brad Davis, Meta’s director for data center community and economic development.
“This deal could signal to other states that this is how data centers should be governed and operated,” said Davante Lewis, Louisiana Public Service Commissioner.
“(The regulator) is prioritizing Big Tech’s interests and Entergy’s profits over Louisianans’ concern about their already unaffordable electricity bills,” said Logan Burke, the executive director for the Alliance for Affordable Energy, a non-profit organization in Louisiana.
“There is no question that this project will affect residents' electricity bills and water supply,” added AAE in a statement.
🚨 Trend alert:
As data centers demand large amounts of energy, this Meta Louisiana data center is the latest example of high-tech companies building their data centers near low-cost energy sources.
Other data centers are being built in Texas and North Dakota, in addition to traditional locations such as Silicon Valley in California and Virginia.
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