On October 25, a major consolidation of two Canadian oil and gas companies was announced with the planned merger of Cenovus Energy and Husky Energy. The prospective consolidation will offer the opportunity for corporate-level synergies and, over the longer term, for the physical integration of some of the companies’ operations, especially in Alberta’s oil sands. In today’s blog, we discuss some of the more nuanced elements of the consolidation, including potential improvement in crude oil market access and the larger presence of the combined company in PADD 2 refining, a sector that has taken a major hit during the pandemic. This blog also introduces a new weekly report from RBN and Baker & O’Brien: U.S. Refinery Billboard.
Cenovus Energy is an integrated oil and natural gas company headquartered in Calgary, AB. It was formed when Encana Corp. (now known as Ovintiv) spun-off its oil-based assets into a separate corporation in 2009, allowing Encana to — at the time — focus on its natural gas assets. Cenovus produces oil in Canada and has refining interests in the U.S. The production assets include oil sands facilities at Christina Lake and Foster Creek (blue dots in Figure 1) and conventional operations at Marten Hills and Deep Basin (blue triangles). Notably, Cenovus announced this week that they have entered into an agreement to sell their Marten Hills oil assets to Headwater Exploration. In the U.S., Cenovus has a 50-50 partnership with Phillips 66 in WRB Refining, which has refineries in Borger, TX, and Wood River, IL (blue refinery icons).
Husky Energy is also an integrated oil and natural gas company based in Calgary. The company was founded in 1938 in Cody, WY, but relocated to Canada in 1946. Since then, the company has grown organically and through acquisitions of companies such as Mohawk Oil, Renaissance Energy, and the Canadian unit of Marathon Oil, as well as the purchases of Valero Energy’s Lima, OH, refinery and Calumet’s refinery in Superior, WI. Today, the company is majority-owned by Hong Kong billionaire Li Ka-Shing, the 30th-richest person in the world. Husky’s oil production assets include oil sands operations at Sunrise, Tucker, and Lloyd Thermal (green dots in Figure 1); conventional assets at Rainbow and Deep Basin (green triangles); and offshore production in the South China Sea (the Liwan project) and the Madura Strait in Indonesia (the Madura project; green offshore platform icons in inset map), and off the coast of Newfoundland & Labrador in eastern Canada (the White Rose project; green offshore platform icon on main map). Husky’s refining assets include the Lloydminster Upgrader in Saskatchewan and asphalt refinery in Alberta; the Superior, WI, refinery (which is currently shut down and under repair after a major explosion/fire in 2018), and two refineries in Ohio (Lima and the BP-Husky JV refinery in Toledo; green refinery icons).
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About the song
“Two of Us” was written by Paul McCartney and credited to the songwriting team of Lennon/McCartney. Recorded in January 1969 at Apple Studio in London, the song appeared as the third song on side two of The Beatles 12th and final studio album, Let It Be. It was Lennon doing the spoken word intro to the song, with a reference to Charles Hawtrey, who was a British comic actor. Personnel on the record were: Paul McCartney (lead vocal, lead acoustic guitar), John Lennon (co-lead vocal, rhythm acoustic guitar), George Harrison (bass line on Fender Telecaster guitar), and Ringo Starr (drums, percussion).
Let It Be was recorded at Apple Studio, EMI, Apple Corps’s rooftop, and Twickenham Film Studios in London in February 1968, January 1969, and January through April 1970. Production duties were handled by George Martin and Phil Spector. The Let It Be album was made in conjunction with the motion picture of the same name, documenting The Beatles going back to their roots in the studio. It was released in May 1970, a month after the official announcement of the breakup of the band. It went to #1 on the Billboard Top 200 Albums chart and has been certified 4x Platinum by the Recording Industry Association of America. Three singles were released from the LP. An alternative version of the album, overseen by Paul McCartney, called Let It Be ... Naked, was released in November 2003. It featured new mixes of the songs and removed most of Phil Spector's embellishments. It went to #5 on the Billboard Top 200 Albums chart.
The Beatles were an English rock band formed in Liverpool in 1960. The core lineup of John Lennon, Paul McCartney, George Harrison and Ringo Starr would go on to change the direction of modern music and pop culture. They released 17 studio albums, five live albums, 52 compilation albums, 36 EPs and 63 singles and have sold more than 600 million records worldwide. They have won an Academy Award, seven Grammy Awards, 15 Ivor Novello Awards and a Lifetime Achievement Grammy Award and are members of the Rock and Roll Hall of Fame as a group and individually. In 1965, Queen Elizabeth II appointed each member an MBE. Paul McCartney and Ringo Starr have been knighted. The Beatles were featured in four motion pictures and 10 documentaries. John Lennon was assassinated in 1980 and George Harrison died in 2001. Paul McCartney and Ringo Starr continue to record and tour as solo artists. Paul McCartney will be on his Got Back Tour in the U.S. and Canada this fall and Ringo Starr will be on his Ringo Starr and His All Starr Band Tour in the U.S. in September.
