Content area
Full Text
Husky Energy Inc.'s C$6.4 billion unsolicited offer for oil sands producer MEG Energy Corp. is part of the company's plans to match its refining capacity with Canadian oil sands output as a means to benefit from the steep discounts on regional production.
Husky, the Canadian oil company controlled by Hong Kong billionaire Li Ka-shing, said the addition of MEG's approximately 90,000 barrels per day of heavy crude could be processed at its refineries in western Canada, Ohio and Wisconsin. By making higher-value gasoline and other refined products, Husky will benefit from the low crude prices that have dogged oil sands producers, Husky CEO Rob Peabody said on a conference call. Husky also has access to capacity on Canada's constrained pipeline network, something that has hampered MEG's ability to expand production.
"MEG has limited transportation and processing options and significant exposure to heavy oil differentials," Peabody said on the Oct. 1 call. "Their...