Cenovus: More Than Meets The Eye
Michael Fitzsimmons • 49 Comments
Michael Fitzsimmons • 49 Comments
Oct. 27, 2015, 7:37 PM
- Energy-dependent Alberta today unveiled its 2015 budget, the first under the new NDP government, projecting a record deficit on falling revenue linked to the sharp slump in crude oil prices.
- It's a spend and borrow budget that will see the province borrowing for operating for the first time in two decades, promising to spend an additional C$4.5B above previous commitments over the next five years for infrastructure such as new transportation projects and hospitals.
- As for the oil sector, which is pleading for a three-year lag before royalties are changed, Finance Minister Ceci indicated no letup from the NDP's promise of royalty increases and tougher climate change regulations once reviews now underway are completed over the next few months.
- Relevant tickers: SU, ENB, TRP, KMI, IMO, CVE, CNQ, OTCPK:HUSKF, OTCQX:COSWF.
Oct. 21, 2015, 6:48 PM
- Cenovus Energy (NYSE:CVE) CEO Brian Ferguson dismisses speculation that the company may be a takeover target, WSJ reports, in an attempt to curb speculation CVE’s depressed stock price could lure outside suitors.
- "We’re not involved” in any M&A deals as a target or buyer, Ferguson says in response to talk that has ratcheted up since Suncor launched its hostile bid for Canadian Oil Sands early this month.
- Desjardins Capital Markets recently tabbed CVE as a potential target, saying "high-quality assets are especially at risk, and that’s food for thought when it comes to other high-quality assets - Cenovus is one such company."
- The CEO also says that while the company remains committed to projects designed to lower carbon emissions, CVE has been forced to reduce its R&D budget in line with broader cost cuts.
- CVE +2.2% AH.
Oct. 20, 2015, 2:30 PM
- Canada's oil patch may have lost a major energy opportunity with the defeat of the Conservative government, but Canadian energy stocks are mostly higher despite the surprise mandate won by Justin Trudeau's Liberals that promises less favorable energy policies and increased environmental stewardship.
- The Liberal majority at least removes the uncertainty of a widely speculated minority government and gives the changing industry political stability in Ottawa, the president of the Canadian Association of Petroleum Producers says.
- Energy proponents in Alberta may be relieved that last May’s provincial NDP victory did not translate into a federal win by Tom Mulcair’s NDP, which would have brought far tougher anti-oil policies that the winning Liberals.
- Trudeau is opposed to Enbridge's (ENB +1.1%) Northern Gateway pipeline, but has expressed qualified support for TransCanada's (TRP +1.4%)Keystone XL and Energy East and Kinder Morgan’s (KMI +0.5%) TransMountain projects, though he would also bring in tougher environmental review processes and a national plan to tackle greenhouse gases.
- Some say an Obama administration veto for Keystone XL would make the job easier for the new Prime Minister in an effort to reset a relationship with the U.S. he says was damaged by the outgoing Stephen Harper.
- Also: SU +1.3%, IMO +1.1%, CVE +1.1%, CNQ +3%, OTCPK:HUSKF +0.6%, CNI +1.9%, CP +3.8%.
- Earlier: Canadian energy stocks to turn red if Harper fails to win upcoming election (Oct. 14)
Oct. 16, 2015, 2:32 PM
- Canadian energy companies Cenovus Energy (CVE -0.3%), Husky Energy (OTCPK:HUSKF -0.5%), Lightstream Resources (OTCPK:LSTMF -2.2%) and Bellatrix Exploration (BXE -3.8%) suffer reduced ratings or outlooks by Standard & Poor’s as slumping commodities prices put pressure on their businesses.
- CVE’s credit rating was downgraded to two levels above junk at BBB from BBB+ with a stable outlook, and BXE was downgraded to B from B+ with a stable outlook, the ratings agency says.
- Husky's outlook on its BBB+ ranking was lowered to negative from stable, while Lightstream's outlook was reduced to negative from stable.
Oct. 15, 2015, 6:45 PM
- Canadian National Railway (NYSE:CNI) and Canadian Pacific Railway (NYSE:CP) are cutting rates for shipping crude oil by as much as 25%, shippers and terminal operators tell Reuters, as the railroads struggle to compete with pipelines for a share of shrinking crude shipments across Canada, where an anticipated boom in oil sands traffic has fizzled with lower oil prices.
- Shipments from Canada to the U.S. have plunged by more than a third this year to 112K bbl/day in July, thwarting industry forecasts made before the oil price crash that total Canadian crude by rail volumes could hit 700K bbl/day by year-end 2016.
- Canadian oil sands producers that ship their crude by rail include Cenovus Energy (NYSE:CVE) and Suncor Energy (NYSE:SU).
Oct. 5, 2015, 5:49 PM
- Investors rushed back into Canadian oil companies today in hopes of picking up the next takeover target following news of Suncor's unsolicited $4.3B bid for Canadian Oil Sands.
- MEG Energy (OTCPK:MEGEF) jumped 22% on speculation it could be the next in line to be taken over, perhaps by Imperial Oil (NYSEMKT:IMO), which has been considered a possible suitor for Canadian Oil Sands.
- Penn West (NYSE:PWE) also surged 22% as investors "clearly are positioning themselves into the next potential target, and both of them [MEG and PWE] make some sense,” says TriVest's Martin Pelletier. "They both have stretched balance sheets, both have been beaten up in the market, and they are a heck of a lot cheaper than last year.”
- Other oil sands stocks also climbed following the Suncor offer: CVE +3.3%, OTCPK:ATHOF +14.5%, CNQ +8.8%.
Sep. 16, 2015, 11:31 AM
- Canadian Natural Resources (CNQ +5.8%) is the latest Canadian oil sands producer looking to cut costs, saying it plans to cut operating costs by $390M more than currently budgeted this year.
- CNQ, which has operating costs of ~US$30/bbl, hopes to lower that figure to $25-$27 within the next few years, to shield itself from U.S. crude prices that have been stuck below $50 in recent months.
- Cenovus Energy (CVE +6.5%) also says it is looking to aggressively slash costs, not satisfied with total costs of $11-$14/bbl and targeting a $1-$2/bbl reduction.
- Suncor Energy (SU +4.2%) has seen its cash operating costs fall to $28.20/bbl in H1 of the year, compared to $33.80 last year.
Sep. 3, 2015, 5:57 PM
- Cenovus Energy (NYSE:CVE) looks prescient in its just-completed $75M acquisition of the Bruderheim Energy Terminal, as delivering crude oil by rail may be making a comeback after losing steam in H1.
- The latest data from Canadian Pacific Railway (NYSE:CP) shows weekly crude carloads exceeding 2,000 units in the last two weeks of August, the first time this year since January.
- Amid oil volatility, discounts for Western Canadian Select have widened to ~US$15.6/bbl over the past six weeks, allowing companies to jump back on to rail.
- Despite skepticism even within the industry about rail’s relevance if major pipelines get built, Cenovus Energy (CVE) says it has already fielded nearly a dozen calls from producers to discuss transporting oil through its newly-acquired terminal that gives it ready access to 70K bbl/day in rail capacity.
Sep. 3, 2015, 10:34 AM
- Cenovus Energy (CVE +2.7%) secured a crude oil export license from the U.S. earlier this year and has completed some transactions within the past month to export from the Gulf coast, Bob Pease, executive VP of corporate strategy and downstream president, tells the Financial Post.
- CVE also is building on its exports to Asia through Kinder Morgan’s Trans Mountain pipeline in British Columbia, Pease says, without revealing the destination or volume of the barrels CVE is set to export.
- Canadian oil and gas companies have been seeking out new markets in an effort to reduce their dependence on U.S. refineries following years of growth in U.S. shale oil production.
Aug. 28, 2015, 2:28 PM
- Alberta's new government launches its royalty review panel, and says it will not raise oil and gas royalty rates until the end of 2016.
- The specter of a higher government take is spooking the industry, especially with oil prices recently hitting more than six-year lows; some have argued the royalty review should be deferred until the outlook improves, while others would prefer to just get it over with.
- Related tickers: SU, ENB, IMO, TRP, CNQ, CVE, TCK, CEO, OTCPK:HUSKF, OTCQX:COSWF
Aug. 13, 2015, 12:45 PM
- A key pipeline for delivering Canadian oil to the U.S. remains shut for a third day, leaving heavy crude stranded in Alberta and keeping its price in the cash market at ~$20 below the WTI benchmark.
- A small leak near Shelbina, Mo., coming from Enbridge’s (ENB -1.1%) Spearhead pipeline, which runs from Flanagan, Ill., to the Cushing, Okla., crude hub forced the shutdown Tuesday of the 193.3K bbl/day pipeline as well as a closing of the parallel Flanagan South pipeline, an even larger 585K bbl/day line that runs from Pontiac, Ill., to Cushing.
- ENB expects operations at Flanagan South to resume today, but does not know when Spearhead may return to service, as it continues to investigate the cause of the spill in Missouri.
- Operational problems at BP's (BP -1.5%) Whiting, Ind., refinery also keep the pressure on prices for Canada’s heavy crude as barrels continue to get backed up.
- Other related tickers: SU, IMO, TRP, CNQ, CVE, TCK, CEO, OTCPK:HUSKF, OTCQX:COSWF
- Earlier: Canadian oil sands price nears $20/bbl, cut in half since July 1
Aug. 12, 2015, 12:27 PM
- Crude oil from Canada’s tar sands has slumped to $23/bbl, chopped in half since July 1 and widening its discount to West Texas Intermediate to nearly $20/bbl, due to a combination of steadily rising production, pipeline constraints and an unexpected outage at a U.S. refinery.
- The price plunge has done little to curb output because oil sands projects require years to plan, construct and pay back; Imperial Oil (NYSEMKT:IMO) recently doubled production capacity at its Kearl oil sands project to 220K bbl/day, and Canadian Natural Resources (NYSE:CNQ) last week said it was built to withstand low commodity prices even as it lost C$405M in Q2.
- At current oil prices, typical oil sands producers are just covering their operating costs, while companies with higher operating costs are “losing money with each barrel they’re producing," says the VP of energy research at ARC Financial in Calgary.
- The results have spilled beyond the oil market into Canada’s economy, forcing the central bank to twice cut interest rates, driving the Canadian dollar to a decade low and impacting the debate ahead of October's federal election.
- Other related tickers: TRP, ENB, SU, CVE, TCK, CEO, OTCPK:HUSKF
Jul. 30, 2015, 3:21 PM
- Cenovus Energy (CVE +1.2%) is higher after cutting its quarterly dividend by 40% and accelerating its cost-cutting efforts while adopting a “more moderate approach” to expanding its oil sands assets.
- Q2 earnings fell to $0.18/share but easily topped analyst estimates, and cash flow dropped 60% Y/Y to $477M.
- CVE says it will cut another ~300 jobs on top of a reduction of 800 jobs announced in February, and raises its cost-cutting target for the year by 40% to $280M.
- CVE says Q2 oil sands output rose 5% to 130.7K bbl/day on a 30% Q/Q improvement in costs, but the production growth was more than offset by lower oil prices.
- CVE keeps its 2015 capital spending plan at C$1.8B-C$2B, but due to its expectations for ongoing low oil prices, it no longer plans to pursue multiple major oil sands construction projects at the same time.
- The company has two producing projects in the oil sands - Christina Lake and Foster Creek - both of which are 50% owned by ConocoPhillips; it plans to take advantage of the slower pace of development to find “the most economic way” to develop a third oil sands project, Narrows Lake.
Jul. 30, 2015, 6:14 AM
- Cenovus Energy (NYSE:CVE): Q2 EPS of $0.18 beats by $0.09.
Jul. 29, 2015, 5:30 PM
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Jul. 28, 2015, 1:12 PM
- Canada oil sands pipeline projects look doomed after the recent Nexen oil spill leaves "two big football fields of black goo," according to a Bloomberg analysis.
- A rupture in a line operated by the Cnooc (NYSE:CEO) unit that spewed 31K barrels of bitumen, waste water and sand has ignited outrage from communities along pipeline routes and is strengthening opposition that already has stalled every major crude export project from Canada and may lead to stricter regulations, the report says.
- The Alberta Energy Regulator could consider new requirements including scheduled and random inspections of pipelines during construction and while in operation, as well as better spill detection technology; meanwhile, the spill gets bad press in Canadian newspapers every day.
- Related tickers: TRP, ENB, SU, IMO, CNQ, CVE, TCK, OTCPK:HUSKF, OTCQX:COSWF
Cenovus Energy, Inc. is an oil company. Its operations include oil sands properties and established crude oil and natural gas production in Alberta and Saskatchewan. The company operates through the following four segments: Oil Sands, Conventional, Refining & Marketing and Corporate &... More
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
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