Bullboard - Stock Discussion Forum Cenovus Energy Inc T.CVE.PR.B

Primary Symbol: T.CVE Alternate Symbol(s): CVE.WS | T.CVE.WT | CVE | T.CVE.PR.A | T.CVE.PR.C | T.CVE.PR.E | CNVEF | T.CVE.PR.G

Energy Oil & Gas Integrated

Cenovus Energy Inc. is a Canada-based integrated energy company. The Company has oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States. The Company's segments include Upstream, Downstream, and Corporate and Eliminations. Its Upstream segment includes Oil Sands, Conventional, and Offshore.... see more

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TSX:CVE - Post Discussion

Cenovus Energy Inc > RBC

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Post by retiredcf on Jun 06, 2024 9:59am

RBC

June 5, 2024

Cenovus Energy Inc.
Highlights from the RBC Global Energy, Power & Infrastructure Conference

TSX: CVE | CAD 26.20 | Outperform | Price Target CAD 33.00

Sentiment: Neutral

Cenovus Energy (TSX:CVE – Outperform) presented today at the RBC Global Energy, Power & Infrastructure Conference, with Kam Sandhar (EVP & CFO) and Jenna Pickering (Investor Relations Specialist) in attendance. Highlights from the company’s breakout session are summarized below:

In one line: Our constructive stance on Cenovus Energy reflects its capable leadership team, strengthened balance sheet, improving downstream operating performance and rising shareholder returns on the horizon.

Net debt target. Achieving its $4.0 billion net debt target remains a big priority for Cenovus as it aims to achieve the target sometime this year—unlocking 100% payout of excess free funds flow to shareholders.
Shareholder returns. Cenovus indicated that its common shares represent good value and that the company will continue to return capital through buybacks, supplemented with further base dividend growth and/or special/variable dividends.
Organic growth cycle. Cenovus is in the second of a three-year investment cycle ending in 2025 that will support about 150,000+ boe/d of upstream growth down the road. 2026 is a year of inflection as capital investment drops from $4.5-$5.0 billion in 2025 to $3.5-$4.0 billion in the 2026-28 timeframe.
Structurally narrower WCS differentials. The Trans Mountain Pipeline Expansion (TMX) has moved into service and should yield structurally tighter WCS geographical spreads once it is running at full rates. The company produces about 800,000 bbl/d of bitumen blend, of which 200,000-250,000 bbl/d is exposed to Hardisty pricing in light of the company’s downstream crude consumption and pipeline commitments.
US downstream. Cenovus continues to progress on getting its refinery kit running at full rates, with an expected utilization rate in the 86%-91% range in 2024.
Superior refinery. Cenovus’ Superior refinery’s (49,000 bbl/d) continues to progress towards full rates as the company continues to work on its HF Alky Unit. Inventory drawdowns should end sometime in late June/early July, after which we should see refinery throughput increase from about 35,000 bbl/d to the 40,000-45,000 bbl/d range.
Lima refinery. Cenovus’ 179,000 bbl/d Lima refinery will undergo a major planned turnaround in the fourth-quarter and is expected to be off-line for 50-55 days (56,000-60,000 bbl/d quarterly impact).
Lloydminster Upgrader. The company’s 81,000 bbl/d Lloydminster Upgrader will undergo a seven-week planned turnaround in the second-quarter (42,000-46,000 bbl/d quarterly impact) on the coker, in addition to reliability improvements.
Narrows Lake tie-back. Pipeline is completed to the Narrows Lake resource and is on-track to start-up in mid-to-late 2025. The tie-back will result in 20,000 bbl/d of incremental production through the Christina Lake facility while driving a lower SOR.
Foster Creek optimization. The optimization of Foster Creek is going according to plan and is expected to come on-stream in early-2026. This should result in an improvement in the operating cost profile of the asset.
Sunrise. The company remains optimistic about increasing throughput rates and reducing its SOR at its Sunrise project (100% wi), which possesses a large resource base. Cenovus will bring two additional sustaining well pads on-stream later this year. The company aims to optimize the asset on the way to achieving production rates of 60,000-70,000 bbl/d by the end of 2026.
Asia-Pacific. Cenovus looks upon its Asia-Pacific business as a reliable cash flow generator requiring low capital investment. The company is continuing to work on incremental gas sales contracts.
Focusing on organic opportunities. On the M&A front, Cenovus indicated it’s focused on regaining operating momentum with its existing assets and organic growth opportunities in the near-term with a preference of owning/operating its assets. Thus, any potential M&A transactions are low on the company’s priority list at this juncture.