Strathcona is the accumulaiton of assets made by Adam Waterous at the Waterous Energy fund. He has a stellar record in buying undervalued, and selling higher valued, oil and gas assets onshore Canada. As I type he is in the middle of an ongoing battle to acquire the remaining 86% of Meg Energy he doesnt already own. The Meg board along with the rival bid from Cenvous are part of the Calgary Country Club and they definetly dont want some Ontario boy scooping up the basin and creating more value than country club has over the years. He is excuting his plan through the ball-point pen and the drill bit, whereas the main lever for the guys at the country club is the drill bit. If Canada wants higher priced stocks then they need to sort out there corporate goverance practices, and the Meg board behaving in the way they are is doing a disserivce to Canada as a whole. Having 3 sentences of engagement with SCR and issuing a break fee toward CVE in there deal is ludicrous. Whether they like Adam or not (they wont), there job is to maximize shareholder returns, and if that means working with there largest shareholder (Strathcona) then so be it. It could mean selling to him, or it could mean negotating with him to squeeze more juice from Cenovus. Either way, Meg shareholders certainly arent happy with the board (luckily I try to stay clear of such management teams). I'd be very surprised if CVE closes MEG, unless they offer a cash premium so ridiculous even Adam accepts. I think SCR wins eventually, either through this offer, or the accumuation of more shares and going activist on the board. Having 14.2% should mean he gets a seat or two on the board which will be entertaining if it went down that route.
The end goal for Adam I think with SCR is to build a Canadian major, something in the order of 700-1000mm bpd I imagine is his goal. And getting Meg is a serious part of that. If he gets Meg, and then procedes to consolidate GFR, they are well on there way to becoming a >350k bpd company by the end of the decade. Let alone whatever inorganic growth Adam decides to do. I dont think SCR will compound at high returns, maybe high teens, unless the price of oil moons over 90 for an extended period of time of course.