MEG, Cenovus revise deal with higher offer, more equity

Mr. James McFarland reports MEG ANNOUNCES IMPROVED CENOVUS TRANSACTION: HIGHER OFFER, INCREASED EQUITY PARTICIPATION, AND SPECIAL MEETING POSTPONEMENT MEG Energy Corp. has entered into an amending agreement with Cenovus Energy Inc. to amend the arrangement agreement between MEG and Cenovus dated Aug. 21, 2025. The amending agreement increases the consideration payable to holders (MEG shareholders) of common shares of MEG to $29.80 per MEG share based on Cenovus's closing share price on Oct. 7, 2025, representing a 46-per-cent premium to MEG's unaffected 20-day volume-weighted share price as of May 15, 2025, the last trading day preceding the first public announcement by Strathcona Resources Ltd. that it intended to acquire MEG. Improved transaction consideration of $29.80 per MEG share represents an increase of $2.35 per MEG share from the announced value of the initial transaction consideration; Improved transaction consideration payable 50 per cent in cash and 50 per cent in highly liquid Cenovus shares; Increased equity component provides MEG shareholders with additional upside participation in Cenovus, an industry-leading producer with significant scale, growth and synergy potential at Christina Lake; The MEG board recommends MEG shareholders vote for the improved Cenovus transaction; The meeting has been postponed to Wednesday, Oct. 22, 2025, at 9 a.m. (Calgary time) to allow MEG shareholders additional time to deposit proxies and vote for the improved Cenovus transaction; Deadline for MEG shareholders to deposit their proxies in order to vote on the improved Cenovus transaction revised to Monday, Oct. 20, 2025, at 9 a.m. (Calgary time); Deadline for MEG shareholders to make an election with respect to their preferred form of consideration to be received under the Improved Cenovus transaction revised to Monday, Oct. 20, 2025, at 4:30 p.m. (Calgary time); For questions or assistance with voting or making elections, contact Sodali & Co., 1-888-999-2785 or 1-289-695-3075 for banks, brokers and callers outside North America, [email protected]. The improved transaction consideration represents an increase of $2.35 per MEG share from the market value of the consideration offered under the initial transaction with Cenovus, as announced on Aug. 22, 2025, and an increase of $1.32 per MEG share from the market value of the initial transaction consideration as of Oct. 7, 2025. Under the revised transaction with Cenovus, as amended by the terms of the amending agreement, each MEG shareholder will have the option to elect to receive: $29.50 in cash per MEG share; 1.240 Cenovus common shares per MEG share; A combination thereof. In all cases, subject to rounding and pro ration based on maximum aggregate cash consideration of approximately $3.8-billion and maximum aggregate share consideration of approximately 157.7 million Cenovus shares, as set out in the amending agreement. The value of the improved transaction consideration represents a mix of 50 per cent cash and 50 per cent Cenovus shares. On a fully pro-rated basis, consideration per MEG share represents approximately $14.75 in cash and 0.620 of a Cenovus share. The consideration to be received by MEG shareholders values MEG at $29.80 per MEG share on a fully pro-rated basis at Cenovus's closing share price on Oct. 7, 2025, representing an enterprise value of approximately $8.6-billion, including assumed debt. In consideration of Cenovus amending and increasing the consideration for MEG, MEG and Cenovus have also amended the terms of the existing standstill agreement between the parties to allow Cenovus to complete purchases of up to 9.9 per cent of the MEG shares. The amending agreement will be filed on MEG's SEDAR+ profile. "We are pleased to announce the amending agreement with Cenovus, which provides improved transaction economics and greater opportunity for MEG shareholders to participate in substantial synergies through a higher equity component," said James McFarland, chairman of MEG's board of directors. "This marks the third enhancement to the terms originally put forward by Cenovus, delivering a significant increase to an already attractive transaction. The improved Cenovus transaction is the value maximizing strategic alternative for MEG shareholders." "Since the initial Cenovus transaction was announced, there has been strong recognition of the industrial logic and the synergy potential between MEG and Cenovus," said Darlene Gates, president and chief executive officer of MEG. "The amending agreement enables MEG shareholders to benefit from greater upside through a significant increase to the proportion of share consideration, while also raising the initial transaction consideration. The improved transaction consideration implies a flowing-barrel metric of $79,500 per bpd, the highest value ever paid for a pure-play oil sands asset." MEG meeting Postponed to Wednesday Oct. 22, 2025 The special meeting of MEG shareholders, previously scheduled for Thursday, Oct. 9, 2025, at 9 a.m. (Calgary time), has been postponed to Wednesday, Oct. 22, 2025, at 9 a.m. (Calgary time), to allow MEG shareholders additional time to deposit proxies and vote for the improved Cenovus transaction. The meeting will take place at Brookfield Pl., 225 -- 6th Ave. S.W., suite 1400, Calgary, Alta., or through a live audio webcast. The password for the live audio webcast of the meeting is meg2025, case sensitive. Deadline to deposit proxies revised to Monday, Oct. 20, 2025 The MEG board urges you to deposit your proxy form or voting instruction form and vote for the improved Cenovus transaction ahead of the revised proxy deadline of Monday Oct. 20, 2025, at 9 a.m. (Calgary time). No further action is required of MEG shareholders who have already voted their MEG shares for the initial Cenovus transaction. MEG shareholders who have not already voted are encouraged to vote their MEG shares for the improved Cenovus transaction promptly, and in any case, prior to the revised proxy deadline, using the instructions provided in their proxy form or voting instruction form. MEG shareholders who previously voted their MEG shares against the initial Cenovus transaction are encouraged to cast a new vote for the improved Cenovus transaction promptly and, in any case, prior to the revised proxy deadline. The later-dated proxy or voting instructions will supersede any previous submission. In accordance with the terms of the interim order, the record date for the postponed meeting remains Sept. 8, 2025. Due to the time sensitivity and the Canada Post strike, MEG shareholders are strongly encouraged to only vote on-line or by telephone prior to the revised proxy deadline using the instructions shown in the attached table. Questions and assistance with voting If you are a beneficial MEG shareholder and have not yet received your voting materials, please contact your broker or investment adviser to obtain your 16-digit control number and vote immediately on-line. Alternatively, contact Sodali & Co. at 1-888-999-2785 or [email protected] for help casting your vote. Deadline to submit consideration election revised to Monday, Oct. 20, 2025 MEG shareholders are entitled to submit their elections in respect of the consideration to be received pursuant to the improved Cenovus transaction. To be valid, MEG shareholders must submit their elections to Computershare Investor Services Inc. (the depositary), who is acting as depositary in connection with the improved Cenovus transaction, by Monday, Oct. 20, 2025, at 4:30 p.m. (Calgary time). No further action is required of MEG shareholders who have previously submitted an election under the initial Cenovus transaction and who do not wish to change such election, including the mix of cash and share consideration elected. MEG shareholders who have previously submitted an election under the initial Cenovus transaction and who wish to change such election, including the mix of cash and share consideration elected, must resubmit their election using the instructions below, prior to the revised election deadline. MEG shareholders who have not submitted an election are encouraged to submit their election in respect of the improved Cenovus transaction using the instructions below, prior to the revised election deadline. Under the terms of the amending agreement, MEG shareholders who do not submit their election ahead of the revised election deadline will be deemed to have elected to receive Cash consideration with respect to 50 per cent of their MEG shares and share consideration with respect to 50 per cent of their MEG shares. MEG shareholders who have already made an election, whether for all Cash consideration, share consideration or a combination thereof, are encouraged to consider their election in light of the improved Cenovus transaction. If a MEG shareholder desires to change a prior election, such MEG shareholder should resubmit their election using the instructions below prior to the revised election deadline. Notwithstanding the election or deemed election of a MEG shareholder for cash consideration or share consideration, such MEG shareholder may receive a combination of cash consideration and share consideration (or a different combination than what was elected by such MEG shareholder), depending on the elections (including deemed elections) made by all other MEG shareholders. A MEG shareholder will not actually receive any consideration until the improved Cenovus transaction is completed and all required documents are submitted to the depositary, including the letter of transmittal and election form and any certificate(s) or DRS Advice(s) representing their MEG shares. Due to the time sensitivity and the Canada Post strike, MEG recommends that all MEG shareholders make their elections and courier or hand deliver required documentation as soon as possible and in advance of the revised election deadline to permit delivery to the depositary at or prior to the revised election deadline in accordance with the below instructions. Please courier or hand deliver to Computershare at any of the following addresses: Toronto: 320 Bay St., 14th floor, Toronto, Ont., M5H 4A6, Canada, 1-416-263-2900; Montreal: 650 de Maisonneuve Blvd. West, seventh floor, Montreal, Que., H3A 3T2, Canada, 1-514-982-7888; Vancouver: 510 Burrard St., third floor, Vancouver, B.C., V6C 3B9, Canada, 1-604-661-9400; Calgary: 800-324 8 Ave. SW Calgary, Alta., T2P 2Z2, Canada, 1-403-267-6800. Registered MEG shareholders: No further action is required of MEG shareholders who have already submitted an election under the Initial Cenovus transaction and who do not wish to change such election. For the benefit of those who have not yet made an election or who wish to change their election, MEG shall deliver a letter of transmittal and election form to each registered MEG shareholder which will outline the necessary documentation and information required to make an election in respect of the consideration such MEG shareholder wishes to receive under the improved Cenovus transaction. Registered MEG shareholders can refer to the instructions contained in the letter of transmittal and election form and ensure they provide the required documentation and information to the depositary ahead of the revised election deadline. Beneficial MEG shareholders: No further action is required of MEG shareholders who have already submitted an election under the initial Cenovus transaction and who do not wish to change such election. MEG shareholders who have not yet made an election or who wish to change their election, and whose MEG shares are not registered in their name but are held by an intermediary or broker may provide instructions to their broker or other nominee to make or change the election on such MEG shareholder's behalf. Intermediaries and brokers may establish earlier deadlines to make an election, and the MEG board urges such beneficial MEG shareholders to contact their intermediary or broker for specific instructions. MEG board unanimously recommends MEG shareholders vote for the improved Cenovus transaction The MEG board, informed in part by the recommendation of a special committee of independent directors and after considering advice from its external financial and legal advisers, unanimously determined that the improved Cenovus transaction is in the best interests of MEG, and approved the amending agreement and the transactions contemplated thereby. The MEG board recommends MEG shareholders vote for the improved Cenovus transaction at the meeting. The improved Cenovus transaction is subject to a number of conditions, including: (i) approval by at least 66.66 per cent of the MEG shareholders represented in person or by proxy at the meeting; (ii) approval of the Court of King's Bench of Alberta; and (iii) other customary closing conditions. The Competition Act Approval and the HSR Approval (each as defined in amending agreement), were obtained on Sept. 25, 2025, and Sept. 16, 2025, respectively, and remain in effect for the improved Cenovus transaction. The MEG board recommends that MEG shareholders vote for the improved Cenovus transaction for the following reasons: Enhanced premium. The $29.80 improved transaction consideration represents a 46-per-cent premium to MEG's unaffected 20-day volume-weighted average share price on May 15, 2025, the last trading day before Strathcona's initial public announcement that it intended to acquire MEG, and a $2.35 and $1.32 increase per MEG share, respectively, to the initial transaction consideration at the time of announcement on Aug. 22, 2025, and based on the current market value of the initial transaction consideration as at Oct. 7, 2025. The improved Cenovus transaction values MEG at approximately $8.6-billion (including assumed debt), or $79,500 per bpd (barrels per day), the highest value ever paid for a pure-play oil sands asset. Preferred strategic alternative after comprehensive review of all alternatives. MEG's comprehensive review process involved outreach to over 15 parties and the publicly announced process gave other parties the opportunity to express interest. MEG received three non-binding proposals, including one from Cenovus, and through rigorous negotiations, MEG secured an increase in the Cenovus offer from $25.00 to $27.25 per MEG share (at announcement) and increased the equity component from 20 per cent to 25 per cent. The amending agreement includes improved transaction consideration of $29.80 per MEG share with an increase in the equity component from 25 per cent to 50 per cent, representing the third enhancement from the terms originally put forward by Cenovus. Participation in realization of significant synergies. The improved Cenovus transaction provides MEG shareholders the ability to participate in future upside through ownership in Cenovus, an industry-leading producer with significant scale and growth potential. The combined company will benefit from greater efficiencies and significant synergies, and Cenovus expects to realize approximately $150-million in near-term annual synergies, increasing to over $400-million per year in 2028 and beyond. Increased equity consideration under the amending agreement further enhances participation by MEG shareholders in the synergies expected from the improved Cenovus transaction. Upside potential in Cenovus shares. One hundred per cent of equity research analysts covering Cenovus rate Cenovus shares with a buy recommendation. The improved Cenovus transaction offers MEG shareholders an option to choose their preferred form of consideration in the form of the cash consideration, the share consideration or a combination thereof. Increased equity consideration under the amending agreement further enhances upside participation for MEG shareholders. Accelerates MEG's standalone value. Cenovus plans to spend an incremental approximately $400-million of capital between 2026 to 2028 to accelerate value and deliver production capacity of 150,000 bpd at Christina Lake by 2028, 15,000 bpd above what is expected of MEG's standalone business plan. Certainty of value and robust liquidity. The improved Cenovus transaction offers a high degree of value certainty, with 50 per cent of the value of total consideration in highly liquid Cenovus shares and 50 per cent in cash. The Cenovus shares will be freely tradeable immediately upon closing. Recommended by both independent proxy advisory firms. On Sept. 26, 2025, and Sept. 30, 2025, Institutional Shareholder Services and Glass, Lewis & Co., respectively, each announced that they recommend MEG shareholders vote for the initial Cenovus transaction. For additional detail, please refer to MEG's investor presentation dated Oct. 8, 2025, which is available at the company's website. MEG's management information circular in respect of the initial Cenovus transaction dated Sept. 9, 2025, is available at the MEG website and on SEDAR+. MEG does not intend to prepare or deliver a revised management information circular in respect of the improved Cenovus transaction. Advisers BMO Capital Markets and Burnet, Duckworth & Palmer LLP are acting as financial adviser and legal counsel, respectively, to the company. RBC Capital Markets and Norton Rose Fulbright Canada LLP are acting as financial adviser and legal counsel, respectively, to the special committee. We seek Safe Harbor.