Cenovus Energy Inc. is buying Husky Energy Inc. in an all-stock transaction valued at $23.6 billion.
Boards of directors at both companies have approved the deal, which is expected to close in the first quarter of next year.
The merged Cenovus Energy Inc. will remain headquartered in Alberta.
Husky shareholders will receive 0.7845 of a Cenovus share, plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share.
The Calgary-based companies said in a joint announcement that the combined company will be the third-largest Canadian oil and natural gas producer, based on total production.
Cenovus CEO Alex Pourbaix will head the combined company.