Core Viewpoint - Cenovus Energy Inc. has announced a definitive agreement to acquire MEG Energy Corp. in a cash and stock transaction valued at $7.9 billion, including assumed debt [1][2]. Transaction Details - Cenovus will acquire all issued and outstanding common shares of MEG for $27.25 per share, with 75% paid in cash and 25% in Cenovus common shares [2]. - MEG shareholders can choose to receive either $27.25 in cash or 1.325 Cenovus common shares, subject to pro-ration based on a maximum of $5.2 billion in cash and 84.3 million Cenovus shares [2]. Strategic Rationale - The acquisition provides an opportunity to acquire approximately 110,000 barrels per day of production from high-quality oil sands resources adjacent to Cenovus's core Christina Lake asset [4]. - Cenovus expects to realize over $400 million in annual synergies, with $150 million of near-term synergies anticipated [8]. Financial Position - Cenovus has secured fully committed financing for the transaction, including a $2.7 billion term loan and a $2.5 billion bridge facility [5][7]. - Post-transaction, Cenovus will maintain liquidity of over $8 billion and expects pro forma net debt to be approximately $10.8 billion, representing less than one times adjusted funds flow at strip pricing [6]. Shareholder Returns Framework - Upon closing, Cenovus plans to adjust its shareholder returns framework, targeting to return approximately 50% of excess free funds flow to shareholders while net debt is above $6.0 billion [8][9]. - The long-term net debt target remains at $4.0 billion, with plans to return approximately 100% of excess free funds flow to shareholders upon reaching this target [9]. Approval and Timing - The transaction has been unanimously approved by the Board of Directors of both companies and is expected to close in the fourth quarter of 2025, pending regulatory approvals and MEG shareholder approval [10]. Advisory and Support - Goldman Sachs Canada Inc. and CIBC Capital Markets are acting as financial advisors to Cenovus, while legal advice is provided by McCarthy Tétrault LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP [11].

Financial Data and Key Metrics Changes - Total revenues for Q4 2024 increased by 19% year-on-year to MXN 7.4 billion, reflecting strong performance across all regions [11][12][22] - Net majority income for the year rose 33% year-on-year to MXN 13.6 billion, supported by resilient operational performance and a foreign exchange gain of MXN 2 billion [22][23] - Consolidated EBITDA increased by 23% year-on-year to over MXN 5 billion, with an adjusted EBITDA margin improving by 200 basis points to 69.7% [18] Business Line Data and Key Metrics Changes - Passenger traffic was flat year-on-year, down 0.3% at 17.7 million passengers for Q4, with full-year traffic at 71 million [5] - Colombia's revenue grew by 30%, while Mexico and Puerto Rico saw low teens growth, with Mexico accounting for 72% of total revenues [12][13] - Commercial revenues per passenger grew in the high single digits year-on-year, reaching MXN 130 in Q4 [15] Market Data and Key Metrics Changes - Colombia experienced mid-teens growth in passenger traffic, with international traffic up 29% and domestic traffic up 7% [6][7] - Puerto Rico's total traffic increased nearly 10%, supported by a strong growth in international traffic [7] - Mexico's performance remained soft, with an 8% decline in passenger traffic, affected by Pratt & Whitney engine restrictions and capacity constraints at Mexico City Airport [8][9] Company Strategy and Development Direction - The company aims to strengthen its airport network through strategic infrastructure investments to enhance passenger experience and expand commercial opportunities [22][23] - Expansion projects include the construction and expansion of Terminal 1 at Cancun Airport, expected to be completed by 2026, and Terminal 4 by 2028 [21] - The company is focused on recovering commercial opportunities lost due to capacity restrictions, particularly in Terminal 2 [29][46] Management's Comments on Operating Environment and Future Outlook - Management expects traffic trends to normalize in Q1 2025 towards sustainable levels, with improvements anticipated by the end of Q3 2025 regarding capacity restrictions [28][33] - The company acknowledges ongoing challenges from Pratt & Whitney engine issues but expects a gradual improvement in operations [27][93] - Management remains optimistic about the resilience of markets like Colombia and Puerto Rico, with expectations for continued growth [50] Other Important Information - Total expenses increased by 13% year-on-year, primarily due to increased concession fees and minimum wages in Mexico [17] - Capital expenditure accelerated to MXN 2.5 billion in Q4, accounting for half of the total MXN 4.4 billion for the year [19][20] Q&A Session Summary Question: Traffic growth expectations and airline network development in Mexico - Management indicated that traffic will continue to be affected by capacity restrictions and Pratt & Whitney issues, but improvements are expected by Q3 2025 [27][28] Question: Capacity increase at Mexico City Airport - Management noted that there are discussions about lifting capacity restrictions at Mexico City Airport, potentially by Q3 2025 [32][33] Question: International traffic flow nuances - Management reported that international traffic from Canada was nearly flat, with no significant changes due to political rhetoric in the U.S. [36][38] Question: Tulum Airport's impact on Cancun - Management confirmed that Tulum's traffic is included in regulatory calculations, but it is not termed as compensation [68][70] Question: Commercial revenue targets post-expansion - Management stated that there are no specific targets for commercial revenues per passenger, as it is a moving target [45][46] Question: Updates on Dominican Republic assets - Management indicated that there are no updates on the Dominican Republic asset, as the legal process continues [82][84]