RE:Cenovus interest??
Cenovus will be transporting 30K bpd a day through NATO in Q4. However, their latest comments and actions strongly signal an interest in expanding their rail exposure:
From WSJ:
Canadian oil sands producer
Cenovus Energy Inc.
CVE.T +0.65% is "in negotiations" with potential business partners to invest in rail terminals for loading crude oil, chief executive Brian
Ferguson said in an interview Wednesday.
"We're assessing those opportunities today," Mr. Ferguson said, declining to provide details on the talks.
https://online.wsj.com/articles/cenovus-ceo-oil-sands-producer-may-invest-in-crude-by-rail-terminals-1406754416
Also Wednesday, Cenovus announced it had created a new leadership position within the company dedicated to crude-by-rail, signalling it expects that transportation mode is here to stay. Kent Avery will be filling that role.
As part of a broader effort to get more value out of the oil and gas it produces, Cenovus has also appointed Bob Pease as executive vice-president of markets, products and transportation.
Most oil producers say they’d prefer to ship their oil to market by pipeline, as it’s more efficient.
But with environmental opposition clouding the outlook for pipelines, firms have been increasingly turning to rail as an alternative – a controversial proposition, especially after last year’s deadly crash by a runaway oil train in Lac Megantic, Que.
But Ferguson sees rail as more than a stop-gap measure, because it offers more flexibility to producers. Specialized railcars can carry bitumen that has been diluted to varying degrees, unlike pipelines, where a lot of dilution is needed for the crude to flow. As well, rail enables crude to be shipped to markets that aren’t served by pipelines.
“I can see us moving a very meaningful of our component total production by rail for a long time,” said Ferguson.
The company completed eight unit train deliveries during the first half of the year. Unit trains consist of 100 or so rail cars carrying a single product. Cenovus says it’s on track to reach 30,000 barrels of rail loading capacity by the end of this year. Ferguson said it’s likely to move more than that next year, although Cenovus has not yet worked through its 2015 budget.
It is very likely that NATO will be either sold or partnered in the next few months, Canexus has indicated publicly that they have received numerous expressions of interest in this strategic asset, an investment in NATO by a producers or a midstream company makes tremendous strategic sense, NATO is pipeline connected to key crude blends, it has massive condensate backhaul handling capacity, extensive storage capacity and direct access to both CP and CN networks. Once NATO is partnered or divested expect CUS stock to re-rate materially higher as they focus back on their core (highly profitable) business under new leadership.
Regards,
Nawar