What on earth is Li Ka-shing betting on by cashing out the power grid for 110 billion Hong Kong dollars and hoarding oil sands with 26.8 billion Hong Kong dollars against the market trend?

Li Ka-shing cashed out the UK power grid with HK$110 billion and increased his stake in Canadian oil sands by 26.8 billion yuan. What is the logic behind the massive reshuffle of energy assets?

In October 2026, Canadian energy company Cenovus Energy announced the acquisition of domestic oil firm Athabasca Oil for approximately CAD 5.7 billion (about RMB 26.8 billion), pushing its daily oil output to nearly 1 million barrels — equivalent to the daily output of some countries. CK Hutchison and the Li Ka-shing Family Trust are the single largest shareholder of Canada's second-largest integrated energy company, holding a combined stake of about 30%.

Just eight months earlier, the Li Ka-shing family sold UK Power Networks, the British power distribution network they had held for 16 years, to French firm Engie for more than HK$110 billion, with an investment return rate exceeding 500%. On the same timeline, the family also launched the sale of Australian distributed energy producer EDL Energy in August.

On the one hand, they cashed out public utility assets at a high point, and on the other hand, they increased their positions in traditional oil and gas against the trend. Is this massive reshuffle of energy assets spanning Europe, Australia and North America a signal of retreat, or a precise rotation of asset classes and risk exposure?

Sold the "iron rice bowl" for HK$110 billion, with a clearer calculation than anyone else

UK Power Networks is by no means a bad asset. It is responsible for operating the power distribution networks in London, the southeast and east of the UK, and is one of the largest power distribution operators in the country. The CK Hutchison Group has held it for 16 years. If the transaction is completed smoothly, the return will exceed 500%. This transaction has set a record for the scale of M&A transactions in the energy and power sector of Hong Kong's capital market in the past nearly 40 years.

However, good assets do not mean they should be held forever. In recent years, many overseas countries have strengthened foreign investment review, and infrastructure assets are increasingly "tied up" by geopolitics. For assets of the "low growth, high certainty" type such as the UK power distribution network, in an environment where political risk premium is rising, the valuation logic is being rewritten.

The Li Ka-shing family's choice to sell at this time is essentially to withdraw capital from mature assets with a flattening return curve. This is not a panic sell-off, but a textbook-style high-point realization. When commercial capital cannot get "escort", it is necessary to re-evaluate the holding risk.

Australian EDL Energy is mainly engaged in clean power, renewable natural gas and remote energy services, which should have been a "sunrise asset" in the global energy transition narrative.

However, the reality is that Australia's distributed energy market is facing multiple pressures — the rapid increase in the penetration rate of renewable energy has intensified the consumption contradiction on the grid side, remote mining power supply customers are significantly affected by the mining cycle fluctuations, and the Australian regulator has tightened the foreign investment review of energy infrastructure.

The combination of these pressures makes the return curve of EDL Energy no longer steep. Selling at this point in time is more a trade-off at the asset portfolio level, that is, to withdraw capital from mature assets with flattening returns and invest in the resource side and technology side with greater scale effect.

Looking back at the investment logic of the Li Ka-shing family in European and Australian utilities, it is nothing more than obtaining global dividends through the "low growth, high certainty" investment portfolio. However, in recent years, geopolitics has increasingly "tied up" infrastructure assets, and commercial capital without "escort" needs to re-evaluate the holding risk. At the same time, the global energy landscape is undergoing another profound change: Energy security has replaced energy transition as a priority in the energy policies of some countries. As a result, the strategic value of traditional oil and gas assets has been revalued.

Hoarded oil sands with 26.8 billion yuan, buying not oil but "time"

The transaction of Cenovus Energy acquiring Athabasca Oil is structured with cash and shares, with the cash portion accounting for 65% to 75%, capped at CAD 4.3 billion; the share portion is capped at 44 million Cenovus shares, accounting for about 35% of the total consideration. The transaction is expected to be closed in December 2026.

Athabasca's core assets, the Leismer and Corner projects, are located in northern Alberta, right next to Cenovus's existing Christina Lake, May River and Thornbury thermal recovery operation areas. This high geographical overlap creates conditions for the integrated operation of the Steam Assisted Gravity Drainage (SAGD) model.

In layman's terms, SAGD refers to the technology that "softens" the viscous oil sand underground by injecting steam and then extracts it to the surface, which features high technical maturity and significant scale effect. To use an improper analogy, it is like two adjacent hot pot restaurants sharing a set of kitchen equipment, and the marginal cost drops immediately.

In terms of resource volume, Athabasca currently produces about 45,000 barrels of oil equivalent per day, but its proven and probable reserves have a service life of more than 75 years. Jon McKenzie, President and CEO of Cenovus, said in a statement that by applying Cenovus's mature SAGD operation model, it is expected to increase Athabasca's thermal recovery production to 115,000 barrels per day by 2032, and achieve annual synergies of about CAD 85 million after the transaction is completed, most of which will be realized in the first full year.

What does a reserve life of 75 years mean? It means that at the moment when energy security replaces energy transition as a policy priority in some countries, the strategic value of traditional oil and gas assets is being revalued.

Oil sand assets are capital-intensive and have high carbon emission intensity, but they have extremely long reserve life and their mining costs continue to decline with technological iteration. What the Li Ka-shing family bought is not short-term oil price fluctuations, but certainty in the long cycle. When the pace of global energy transition loosens in some countries, traditional oil and gas assets have instead become underlying assets with valuable value.

Forty years of reincarnation, forming a closed loop from Husky to Athabasca

This acquisition is not an isolated event. Last November, Cenovus completed its acquisition of MEG Energy, adding about 110,000 barrels of oil sand production per day.

The earlier history can be traced back to December 1986, when Li Ka-shing's Hutchison Whampoa acquired 52% of the troubled Husky Energy for HK$3.2 billion, and completed the all-stock merger with Cenovus Energy in 2021. This investment was later called by Li Ka-shing himself "one of the most outstanding investments in his life".

From bottom-fishing Husky Energy 40 years ago to successive acquisitions of MEG and Athabasca now, the CK Hutchison Group under the Li Ka-shing family has formed a complete closed loop in the layout of Canada's upstream oil and gas sector.

The significance of this closed loop is that the CK Hutchison Group has formed a complete capability covering resource reserve, mining operation and M&A integration in Canada's oil sand producing areas. The high geographical overlap between Athabasca's Leismer and Corner projects and Cenovus's existing operation areas is not a coincidence, but a carefully designed resource puzzle.

With the "left hand" selling public utility assets under the pressure of geopolitical review, and the "right hand" adding positions in long-life traditional oil and gas resources.

At the moment when geopolitics is reconstructing the valuation logic of energy assets, the "massive reshuffle" of the Li Ka-shing family in the energy and power sector does not send a retreat signal, but a rotation of asset classes and risk exposure. The core judgment of this rotation is: During the transition period of the reconstruction of the global energy landscape, the strategic value of traditional oil and gas assets is underestimated, while the political risk of public utility assets is underestimated.

The core logic of this reallocation of energy assets spanning three continents is not complicated: Withdraw capital from mature public utilities with rising political risks and flattening return curves, and invest in traditional oil and gas resources that have extremely long reserve life, significant scale effects, and are re-priced in the global energy security narrative.

What the Li Ka-shing family bets on is not the short-term rise and fall of oil prices, but the sustainability of the macro trend that energy security takes precedence over energy transition. When some countries put energy security in the first place of their policies, the strategic value of traditional oil and gas assets will be revalued. Forty years is a cycle. From Husky to Athabasca, CK Hutchison has formed a closed loop in Canada's upstream oil and gas sector. This account will eventually be verified by time.