RE:RE:Strengths / weaknesses Another weakness is Atlantic Canada..... but that can become a Strength when the price of oil is right.
If CVE turns inward and only focuses on "Core Alberta oil".... and becomes less "diversified" and less intergrated (selling off Asian assets and gasoline retail stations).... I consider that a weakness.
All just my opinion/view/thinking....
Thank-you for talking about both Pros/Cons... This is better.
RagingBull3 wrote: THANK YOU SHayden !!!! For the Strengths
AND weakness analysis.
Yes, I agree, the Massive Writedowns (hopefully also write-ups) do make the Profit metric difficult/less reliable to use. But, while the writedowns are "paper losses" they do represent something of significance. The value of the assets are worth less in a less when oil price is lower... That's a Fact. If someone going to buy CVE, they are not going to pay based on $120 oil right now.. SHARE PRICE, a factor that makes up the price of the share is the Value of the Company.... Profits/Losses represents the value going UP/Down...and project the future direction of the value to some extent.
So, for me, Profit/Loss is still a top metric..... And it explains the downward trend the past 7 years, at least to me it does..... past 6 years...2014,15,16,17,18,19 had people screaming look at the cash flow cash flow and not understanding why share price tanking.
Anyways, so far, looking Brighter for CVE with $74+ oil.. Share price should move higher when Q2 shows Huge Cash Flow and significant increase in Profits.
All just my opinion/view/thinking.
SHayden wrote: Strengths
Large production base
Multiple grades
Multiple revenue streams
Vertical intagration
Massive liquidity (credit avaliability)
Refining
Rail access
Pipeline access
Co-gen
Line 3 / TMX entering operation soon (narrowing of the WCS diff)
Most debt is termed out and locked in rates
Weakeness
Debt (Although this is a lot less of a concern that it is made out to be)
Political / ESG
vunerable to oil prices / opec
Operating assets in an enviroment they have less experiance in (off shore / china)
Superior is inactive
Profit is a poor metric to use for companies like this because of inventory, there is a value placed on P1/P2/P3 depending on the current price of oil they will re-evaluate the value of those reserves which will create a meaningless profit or loss on the financal statements. This is why profit is not a valuable metric for a company like this. When you have to de-value 9 billion barrles of oil, that is going to really impact the statements.
Cash flow is better as it shows the cash generating ability of the company. Debt reduction is another good metic however this also gets scewed by the currancy changed from CAD to US. Also debt reduction is harder to read out when a takeover has occured as there will be a massive ammount of one time costs in each of the quarters for the first year, but they are generally most heavily weighted on the first two.
Cenovus is a world class SAGD operator, as time goes on and they optimize the HSE assets the cost of production will come down also debt will be reduced. We will see the cost of production reduced and interest costs reduced. This will result in more excess funds on hand. Once oil has reached a stable place and they do not need to re-evaluate the value of the p1/p2/p3 reserves we will have clearner financal statements to read and "profit" will be a meaningful metric, but at this time it is not due to the reasons mentioned above.