(Bloomberg) — Cenovus Energy Inc. is in talks with Indigenous groups in Canada to jointly buy MEG Energy Corp., an oil sands producer that faces an unsolicited $4 billion takeover bid from a Canadian oil tycoon.

A group of First Nations and Metis communities including Chipewyan Prairie First Nation and Heart Lake First Nation are in talks with Cenovus about taking a C$2 billion ($1.45 billion) stake in MEG, according to people familiar with the discussions. The Indigenous stake would be backed by financial support from the federal and provincial governments, while Cenovus would bid for the rest, the people said.

A joint offer for MEG could be made as early as September, though talks may fall apart. 

Emails and calls to Cenovus weren’t returned, nor were calls to First Nations groups involved. MEG didn’t immediately respond. Natural Resources Canada declined to comment in an email. The Alberta Indigenous Opportunities Corp., which helps finance investments, didn’t respond to an email seeking comment.

The deal, if successful, would mark the first large, direct Indigenous stake purchase in an oil sands producer. It would also unite two Calgary-based companies with significant operations in the oil-rich region of northeastern Alberta. MEG’s Christina Lake project includes 200 square kilometres (77 square miles) of leases in the area, and the company has regulatory approvals to produce around 210,000 barrels a day. 

MEG was put into play in May when Strathcona Resources Ltd. made an unsolicited cash-and-stock bid that valued MEG at about C$6 billion. Strathcona, controlled by former investment banker Adam Waterous, made the bid after taking a 9.2% stake in the company. MEG’s board advised shareholders to reject Strathcona’s bid, calling it inadequate. The board also started a strategic review that may include finding other offers.

MEG traded at C$25.85 a share at 11:45 a.m. in Toronto on Tuesday. That’s above the C$23.27 offer from Strathcona, signalling investors are expecting a higher bid.

Alberta’s First Nations have increasingly sought ownership of large energy-related infrastructure projects such as pipelines and tank storage farms to earn revenue. Canadian energy companies have been partnering more frequently with the communities whose land is affected by their projects in a bid to head off potential environmental and legal opposition. 

Cenovus, the third-largest Canadian crude producer by market value, has operations in the Christina Lake region near the MEG site. The company produced the equivalent of about 800,000 barrels a day last year — mostly bitumen, along with natural gas liquids and some conventional oil and natural gas. The Financial Post reported last month that Cenovus is preparing a bid.

More stories like this are available on bloomberg.com