Cenovus Energy Inc T.CVE

Ink Research

[retiredcf]

Morning Report: Relentless insider buying in the Canadian oil patch 

March 12, 2024

Insider buying in the Canadian oil patch continues. After some insider profit-taking in Q3 last year which pushed Cenovus

(CVE) into the mixed INK Edge outlook category, insiders are now buying again. CVE targets returning 50% of excess free funds flow to shareholders in quarters when the ending net debt is between $4.0 and $9.0 billion. It reported exiting Q4 with net debt of $5.1 billion and returned $731 million to shareholders in the quarter ($270 million via dividends, $350 million through share buybacks, and $111 million for the payment of common share warrants obligations). As we report today in our February buyback member worksheet in INK Chat, Cenovus spent almost $51.4 million on share buybacks last month. That is in addition to $75.2 million in January. CVE has a base quarterly dividend of $0.14 per share payable to shareholders of record as of March 15th. For 2024, it expects to produce between 770,000 and 810,000 barrels of oil equivalent per day.

When we last reported on Crescent Point Energy (CPG) on November 10th, the stock had fallen out of favour after the company decided to buy Alberta producer Hammerhead Energy. It has won back some fans as it is now up 4.2% since our report versus +2.1% for the S&P/TSX Capped Energy Index. During the recovery, a key executive has been buying. For 2024, CPG expects average production of midpoint 202,000 boe/d (65% oil & liquids). CPG envisions excess cash flow of about $830 million at average commodity prices of about US$75/bbl WTI and $2.30/Mcf AECO for the full year (see the February 29th CPG press release for commodity price sensitivities). CPG expects to allocate 60% of excess cash flow to shareholders via a base dividend and share repurchases, with the remaining 40% going to its balance sheet. CPG recently boosted its quarterly dividend by 15% to $0.115 per share.