Cenovus: More Than Meets The Eye
Michael Fitzsimmons • 49 Comments
Michael Fitzsimmons • 49 Comments
May 26, 2015, 6:33 PM
- Cenovus Energy (NYSE:CVE) says it will replace four executives on its eight-person leadership team during the year, but the multiple retirements cause some analysts and investors to speculate that the moves really are about saving money.
- "It’s cost-cutting, which makes sense because the company was staffed and built to really grow oil sands production,” says Brompton Group's Laura Lau.
- The internal replacements signal that the changes were not a board-mandated shakeup, otherwise the company would bring in external replacements, but the timing raises questions about what might be going on internally, according to money manager John Stephenson.
- However, CVE is launching an executive search to replace executive VP and COO John Brannan; CVE says it will not appoint a new COO but replace the role with a president of upstream oil and gas, to be named in September.
May 26, 2015, 10:18 AM
- Canadian Natural Resources (CNQ -2.7%) shut production yesterday from its Kirby South oil sands operation in Alberta, raising the amount of production brought offline because of the nearby forest fire that began earlier in the weekend to 233K bbl/day, or ~10% of the province’s total oil sands output.
- CNQ already had shut 80K bbl/day of production at its Primrose facility, and Cenovus Energy (CVE -2.7%) had closed its 135K bbl/day Foster Creek operations in Alberta.
- MEG Energy (OTCPK:MEGEF) also said it had suspended operations at its Christina Lake oil sands project and moved non-essential staff from the site due to the potential risk of the fires.
May 25, 2015, 12:11 AM
- Cenovus Energy (NYSE:CVE) has shut down operations at the 135K bbl/day Foster Creek oil sands project and Canadian Natural Resources (NYSE:CNQ) closed its 80K bbl/day Primrose project after a forest fire broke out on the Cold Lake Air Weapons Range in Alberta.
- CVE and ConocoPhillips (NYSE:COP) each own 50% of Foster Creek, with CVE's share of the production representing 31% of total company-wide average oil output of 218K bbl/day; Primrose's production represents less than 10% of CNQ's total corporate output.
- More than 7% of Canada's oil sands production has been shut down by the fire, which started Friday and is considered "out of control."
May 15, 2015, 2:45 PM
- Canada says it is committing to cut greenhouse gas emissions by 30% below 2005 levels by 2030, partly by introducing new regulations on its oil and gas sector.
- Environment Minister Aglukkaq says Canada will cut its emissions to 515 metric megatons by 2030 from 726 metric megatons in 2013; earlier this week, Ontario - Canada’s most populous province - set its own 2030 target of 112 megatons, which would represent a 46% cut from 2005 levels.
- To meet the new target, Canada will develop regulations to cut methane emissions from the oil and gas sector, such as industrial leaks and gas flares, as well as new rules to control emissions from the electricity and chemical sectors, including from nitrogen fertilizers.
- Relevant tickers: SU, ENB, TRP, IMO, CNQ, CVE, TCK, TAC, OTCQB:HUSKF, OTCQX:COSWF
May 7, 2015, 6:25 PM
- Canadian oil producers plunged for a second straight day as "all bets are off" after election results in Alberta raised concerns over the possibility of higher taxes for the companies.
- Among today's losers: SU -2.6%, OTCQB:HUSKF -5.2%, GTE -5.8%, PWE -5.7%, IMO -1%, CVE -1%, OTCQX:COSWF -3.4%, OTCPK:MEGEF -5%.
- COSWF is among the most exposed to a potential hike in royalties and stricter environmental policies, while electricity supplier TransAlta (NYSE:TAC) would suffer from the new government’s vow to shut coal plants sooner than planned, according to analysts at BMO Nesbitt Burns and RBC Dominion.
- Advice is split on owning stocks of companies that transport and process fuels in Alberta; Raymond James says stocks such as TransCanada (NYSE:TRP) and Enbridge (NYSE:ENB) are less directly exposed to reduced investment in the sector, but RBC advises to sell pipeline and midstream companies with operations in Alberta.
- Analysts also are divided about how much producers with oil refineries, such as SU and IMO, could offset losses from potentially higher royalties by boosting processing of crude in Alberta, a move pro-labor NDP has pledged to support.
May 6, 2015, 2:36 PM
- Canadian energy stocks are broadly lower after the shocking election result in Alberta raised questions about the future of the country's oil industry: SU -3.3%, ENB -2.8%, TRP -2.6%, IMO -2.3%, CNQ -2.3%, CVE -5.8%, OTCQB:HUSKF -1%, TCK -1.6%, TAC -4.1%, OTCQX:COSWF -6%.
- "Energy is such a critical issue to Alberta, I’m really not that concerned," ENB CEO Al Monaco says, but investors and analysts disagree.
- "It’s completely devastating" for energy companies and investors, saysCanoe Financial's Rafi Tahmazian of stated plans by the newly elected government to raise corporate taxes, review the government’s take of energy revenue, scale back advocacy for pipelines and phase out coal power more quickly.
- “If you are invested in energy stocks, you should be concerned,” says AltaCorp’s Jeremy McCrea, noting that drillers already face higher costs to extract oil and gas in Alberta than in many jurisdictions, so an increase in royalties would make the province even less competitive.
May 6, 2015, 7:38 AM
- In a stunning election result, voters in Canada's energy-rich Alberta province swept aside the four-decade hold on power by the ruling Progressive Conservative Party and elected an New Democratic Party majority government that wants to raise corporate taxes and increase oil and gas royalties.
- NDP leader Rachel Notley - who has vowed to raise the corporate tax rate to 12% at a time energy companies are reeling from layoffs and project cancellations amid weaker oil prices - is expected to succeed Jim Prentice as Alberta’s premier.
- Notley has said she would not lobby for the proposed Keystone XL pipeline to link Alberta’s oil deposits to refineries in Texas, and that she is against the Northern Gateway pipeline from Alberta to the British Columbia coast.
- She also has promised another review of oil royalties at a time other oil producing areas around the world that are also struggling with low oil prices are expected to make their terms more appealing.
- Relevant tickers: ENB, SU, TRP, IMO, CNQ, CVE, OTCQB:HUSKF, OTCQX:COSWF, XOM, BP, RDS.A, RDS.B
Apr. 29, 2015, 12:58 PM
- Cenovus Energy (CVE +0.1%) is trading around the flatline after reporting a larger than expected Q1 loss and a 45% Y/Y drop in cash flow, as lower oil prices far outweighed higher oil sands production and lower.
- CVE says production at its oil sands operations rose 20% Y/Y to more than 144K bbl/day and its cost to produce a barrel of crude from those assets fell by 31% with more cost cutting measures underway; however, these benefits were more than offset by the 49% Y/Y drop in average Brent prices.
- CVE also says it expects to add ~100K bbl/day of gross oil sands production capacity, bringing total oil sands production capacity to 390K bbl/day in 2016.
- In CVE's earnings conference call, CEO Brian Ferguson said current commodity prices are sufficient to cover both 2015 its capital spending and dividend payout.
Apr. 29, 2015, 6:04 AM
- Cenovus Energy (NYSE:CVE): Q1 EPS of -$0.11 misses by $0.02.
Apr. 28, 2015, 5:30 PM
- ABB, ACCO, ADT, AME, AMED, ANTM, AVY, BC, BEN, BGCP, BOKF, CBG, CCJ, CFR, CRI, CVE, DHX, DX, DXYN, EDR, ETN, EVER, EXC, FCAU, FCH, FDML, FI, FUN, GD, GEL, GIB, GRMN, GRUB, GT, HCBK, HERO, HES, HLT, HOT, HUM, ICON, IDCC, IP, ISSI, LFUS, LINE, LL, LVLT, MA, MDLZ, MTOR, MWV, NEE, NOC, NSC, NYCB, OCR, PCG, PX, Q, RES, ROL, SAIA, SAVE, SLAB, SLGN, SNCR, SO, SPIL, SPR, SPW, TRI, TWX, UMC, VRX, WEX, WM, WOOF
Apr. 23, 2015, 3:09 PM
- Cenovus Energy (CVE +4.2%) has hired TD Bank to explore the possible sale or IPO of its royalty lands in western Canada, Bloomberg reports.
- The royalty lands, located across Alberta, Saskatchewan and Manitoba, could fetch as much as C$1.6B ($1.3B) in a sale, according to RBC analyst Shailender Randhawa, who says CVE has 3.1M net acres of royalty lands that produce 7,600 boe/day and generated C$150M in pre-tax operating cash flow for the company.
- Potential bidders are speculated to include other royalty companies such as PrairieSky (OTC:PREKF), Freehold Royalties (OTCPK:FRHLF) or Franco-Nevada (NYSE:FNV), as well as pension plans or P-E players.
Apr. 22, 2015, 6:53 PM
- Nomura came out bullish today on the energy E&P sector - issuing Buy ratings for MRO, PXD, EOG, CLR, APC, NFX, RRC, CNQ, CXO, ECA and SU - even as the firm does not foresee a V-shaped rebound in crude oil prices.
- Nomura believes core North American shale plays do not represent the economic marginal cost of supply in the world, which runs counter to commonly held views that largely see shale occupying the high end of the cost curve; thus as oil rebounds, so will investment in the shales, which should support prices, the firm says.
- In such an environment, Nomura says selecting stocks will depend on factors such as ”the reinvestment opportunity set, impact of oilfield technology, continued efficiencies, potential new geologic plays, management acumen and balance sheet strength."
- The firm is Neutral on DVN, HES, MUR, OAS, UPL, WLL, XEC, COG, COP and SWN; it rates NBL, APA, DNR, CHK and CVE as Reduce.
Mar. 19, 2015, 4:58 PM
- Cenovus Energy's (NYSE:CVE) $1.3B funding gap for 2015 may wind up smaller than anticipated, TD Securities analyst Menno Hulshof says as he points to the improved refining outlook since earlier this year due to the widening Brent-WTI crude differential.
- Hulshof notes CVE's guidance indicated that every US$1/bbl increase boosts refining cash flow by US$90M; if crack spreads averaged US$16.75 - $5 higher than guidance - then the refining cash flow outlook would increase to ~$700M and the funding shortfall would fall to $850M.
- The analyst also says CVE appears to be turning the corner on coalescence issues at Foster Creek since operating costs and steam-to-oil ratios appear to have peaked and are trending lower.
Mar. 4, 2015, 11:22 AM
- Kinder Morgan (KMI -0.6%) wants to drill through Burnaby Mountain in British Columbia to reach an oil-loading ship terminal, but WSJ reports that it is facing more challenges than the mountain itself, as it also is battling resistance from Vancouver officials and protestors opposed to fossil fuel development.
- Burnaby Mountain has become a symbolic battlefield in a much larger debate about energy resources in North America, opponents and supporters of the pipeline plan say.
- Canadian oil producers are counting on KMI’s $4.3B proposal to triple the capacity of the existing Trans Mountain pipeline, which connects Alberta’s oil sands to a Pacific coast terminal, as the fate of the Keystone XL pipeline remains in limbo.
- More than a dozen oil companies have binding deals for up to 20 years with the pipeline, including Exxon (NYSE:XOM) affiliate Imperial Oil (NYSEMKT:IMO), Cenovus Energy (NYSE:CVE) and Canadian Natural Resources (NYSE:CNQ), who view the project as a vital link to new markets in Asia.
Feb. 18, 2015, 7:45 PM
- Warren Buffett's decision to dump his entire $4B stake in Exxon Mobil (NYSE:XOM) is pointing investors toward more nimble producers such as Suncor (NYSE:SU) and Phillips 66 (NYSE:PSX) that can deliver higher returns during an oil price recovery.
- J.P. Morgan is reiterating its lukewarm outlook on XOM, "which has not yet fully pulled the trigger to just run at maintenance type levels," as well as ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX) and Cenovus Energy (NYSE:CVE), which the firm says are "getting quite close to their sustaining capex/free cash flow potential already."
- Not everyone is so down on the supermajors; BlackRock favors the group because of their strong balance sheets, high dividends and integrated business models, and Ed Yardeni notes that the stocks remain attractive for income-oriented accounts.
Feb. 18, 2015, 9:15 AM
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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