Cenovus Energy has agreed to acquire Athabasca Oil in a cash-and-stock deal valued at 5.7 billion Canadian dollars ($4 billion), expanding its thermal oil sands position in western Canada.

Under the terms of the agreement, Athabasca shareholders will have the option to receive C$12.00 in cash, 0.264 of a Cenovus common share, or a combination of both for each share held, capping total consideration at up to 75% cash and 35% equity.

The transaction adds about 45,000 barrels of oil equivalent per day in immediate production near Cenovus's existing Christina Lake and Foster Creek operations in Alberta, while establishing a path to ramp total thermal output to 115,000 barrels per day by 2032.

Cenovus said Monday that it expects the deal to generate C$85 million in annual synergies, with the majority captured in the first fill year of operation.

The deal is expected to close in December 2026.