This energy company has absorbed its most recent acquisition and is posting significant cash flow, yet the shares remain undervalued.
Cenovus Energy Inc. (CVE)
From The Energy Investor
Cenovus Energy Inc. (CVE) is a Canadian oil company that’s developing its assets in the oil sands and Deep Basin. The company acquired ConocoPhillips’ 50% non-operated interest in the Foster Creek Christina Lake partnership and also a majority of its western Canadian Deep Basin gas assets back in March 2017.
Even though there’s a lack of news, I remain bullish on this position over the long run. For starters, we know that the U.S. can’t get enough heavy oil supplies right now. Not only is Venezuela’s future output in jeopardy due to its collapsing oil industry (not to mention the current sanctions we have levied against them), it also appears that the Saudis are starting to send less of their thick crude our way as they try to take more market share in China away from Iran.
Canada is the perfect place to make up for that loss of heavy crude, and Cenovus has established itself as a premiere producer in the oil sands area. The problem, however, is that pipeline capacity is sorely inadequate. Major pipeline projects have been delayed or canceled outright.
The desperate need for Canadian heavy crude by our Gulf Coast refiners is clear, with prices of Western Canadian Select trading in a far better place today than it was at the end of 2018.
A barrel of Western Canadian Select, which was trading as low as $12.31 late last year, is now going for around $44 per barrel. Prices will rise as access to heavy Canadian crude remains constrained.
Cenovus Energy is a buy under $17.
Keith Kohl, The Energy Investor, www.angelpub.com, 877-303-4529, September 2019