RE:RE:RE:RE:2 WeeksSpikearoo1 wrote: Been buying tons of CVE and CPG. These seem like the best 2 plays in CDN Crude.
Focus today was on CVE. Just couldn't resist.
What is the most odd thing is that when oil was trading at $35/$40 CPG / CVE was trading that the current prices that they are at now. WTF?
Oil at $60 and we are still trading at these low prices. Someone said buy it, and look in 24 months...you will be happy you did...Good luck gang...S
CVE is trading low because WCS is at $33. It doesn't trade with WTI. Aeco nat gas is well under $2. CVE has $9 billion in debt and analysts are frustrated that CVE isn't selling off its refinery and all their non-oil sands assets. CVE doesn't want to sell them because they believe they are more valuable long term. Whatever assets they do have on sale will probably not get a good price because natural gas prices are so low.
HOWEVER, I believe CVE is one heck of an opportunity. If you take a look at the historical WCS-WTI differential, -$25 to -$30 rarely holds for more than a few months, and the CVE CEO said as much today. He said that it will narrow in the short term because the pipeline that is running at 80% will "soon" go back to max flow. Also, they will start shipping oil by rail this summer, which will narrow the differential.
For every extra $1 in WCS, they make like $120 million extra a year. They don't need to sell any assets, I think they can whittle down debt with their FFO. Analysts always have a very short term, myopic view. CVE should do what they're doing and they will do very well in a few years.
As for CPG, for some bloody reason, everyone thinks it trades off of WCS. It does not. When they release earnings on March 1, you'll see them discuss that topic and I hope that will be the end of it.