Stock Research and Analysis

by Xavier Grunauer, CFA

Bulls Say

Cenovus possesses high quality in situ oil sands leases in Canada’s Athabasca region that require little to no exploration budget.
Its 2007 joint venture with Phillips 66 allowed Cenovus to secure downstream assets that provide some downstream integration of its heavy oil production, and lower current and future exposure to spot pricing heavy oil differentials.
Cenovus' constant reach for improved technology (“Wedge Well” being a good example) is expected to provide sustainable and potentially lower per unit cost over our forecast period. Read more 

Bears Say

Upstream oil sand operations require $69/bbl WTI to generate excess returns on capital.
Current oil prices have placed greenfield oil sands growth projects such as Narrow Lake, Grand Rapids, and Telephone Lake on hold for the moment.
Larger Canadian oil sand operators have developed higher levels of upstream and midstream integration, realizing higher oil sand ROICs. Read more 

Management

Brian Ferguson became president and CEO of Cenovus in November 2009 when the company was split off from Encana. Ferguson’s history with Encana goes back to 1984 when he first joined Alberta Energy. We note that ROICs have trended below WACC estimates   Read more 

Profile

Cenovus Energy is an oil-weighted E&P producing more than 275,000 boepd (73% oil) from its Canadian asset base. While it has a strong portfolio of conventional assets,  Read more 

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