07:49 AM EDT, 09/15/2025 (MT Newswires) -- (Adds background from the fifth paragraph)

MEG Energy Corp. ( MEGEF ) announced Monday that its board has reaffirmed its unanimous recommendation to its shareholders to vote for the Cenovus transaction and recommends that MEG Shareholders reject the revised unsolicited Strathcona Resources Ltd. ( STHRF ) offer.

Among highlights, MEG said the revised Strathcona offer exposes its shareholders to "inferior assets, an unproven track record, an overvalued Strathcona share price, significant overhang risk, and governance risk."

It also said the special distribution described in the revised Strathcona offer "results in a weaker balance sheet and increased financial risk for the combined company compared to the initial Strathcona offer."

MEG added the Cenovus transaction "accelerates value realization from MEG's standalone plan, provides shareholders with substantial cash and highly liquid share consideration with lower risk and upside participation in long-term value creation potential."

As background, MEG noted that on August 22, 2025, it had entered into an arrangement agreement with Cenovus Energy Inc. ( CVE ) that was to see Cenovus acquire all of the issued and outstanding MEG shares in a transaction that valued MEG at $28.18 per share on a fully prorated basis at Cenovus's closing share price on September 12, 2025, representing an enterprise value of approximately $8.2 billion, including assumed debt.

It noted the Cenovus transaction provided MEG Shareholders with choice to elect their preferred form of consideration and was to be completed by way of a plan of arrangement where each MEG shareholder will be entitled to elect to receive: $27.25 in cash per MEG Share; or 1.325 Cenovus common shares per MEG share; or a combination thereof; in all cases, subject to rounding and proration based on the maximum amount of cash and the maximum amount of Cenovus shares to be provided to MEG shareholders, as set out in the arrangement agreement.

On a fully pro-rated basis, consideration per MEG share represents approximately $20.44 in cash and 0.33125 of a Cenovus share.

MEG noted that on September 10, 2025, a revised Strathcona offer, offered MEG shareholders 0.80 of a Strathcona common share per MEG share. As part of the proposal, Strathcona indicated that if the revised offer is successful, MEG shareholders would be eligible to receive a proportionate share of the potential "special distribution" by Strathcona totaling $2.142 billion, the payment of which remains subject to various conditions and approvals. The special distribution would equate to approximately $4.18 per MEG share at the offered 0.80 exchange ratio. MEG said the special distribution, if completed, does not deliver incremental consideration to MEG Shareholders as it would significantly increase the leverage of the combined company and reduce its equity value by $2.142 billion, thereby negatively impacting the price of Strathcona shares that MEG shareholders would receive under the revised Strathcona offer.

"The revised Strathcona offer remains fundamentally unattractive for MEG shareholders because it fails to address or adequately compensate for the significant risks embedded in Strathcona Shares," said James McFarland, Chair of the MEG Board. "MEG shareholders would be exposed to inferior assets, an unproven track record, an overvalued Strathcona share price, significant overhang risk, and governance risk."

McFarland added: "In contrast, the Cenovus transaction delivers an attractive price, upside potential, substantial cash, and value certainty that MEG shareholders deserve. The board unanimously recommends that MEG shareholders vote FOR the Cenovus transaction."