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Cenovus Energy Inc T.CVE

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

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. Its Downstream segment consists of Canadian Manufacturing, and United States Manufacturing. The Company's upstream operations include oil sands projects in northern Alberta, thermal and conventional crude oil, natural gas and natural gas liquids (NGLs) projects across Western Canada, crude oil production offshore Newfoundland and Labrador and natural gas and NGLs production offshore China and Indonesia. The Company's downstream operations include upgrading and refining operations in Canada and the United States, and commercial fuel operations across Canada.


TSX:CVE - Post by User

Post by retiredcfon Dec 08, 2021 11:52am
290 Views
Post# 34210750

TD

TDThis is a flash report so there's a possibility that they raise their current target of $21.00. GLTA

Cenovus Energy Inc.

(CVE-T, CVE-N) C$16.23 | US$12.83

Thoughtful Five-year Plan, Several Directional Positives Event

2022 budget and first five-year plan since Husky merger. Investor day at 10 a.m. ET (webcast).

Impact: SLIGHTLY POSITIVE

Stronger-than-expected 2022 outlook: 2022E production guidance of 800 mboe/ d is 3%/2% above consensus/TD estimates, while capex of $2.8bln (before Superior insurance recovery) is 2%/5% below consensus/TD estimates. Production guidance reflects ~15.3 mboe/d of divestitures in 2021.

 2022E capex is up 12% y/y, primarily driven by deferred sustaining capex from 2020/2021 and major planned oil sands turnarounds. Its targeted $1.2bln/annum Husky synergies run-rate has been achieved, in line with its target (i.e., before YE2021).

Shareholder returns underway with future upside: CVE, with Q3/21 results, announced a dividend doubling and up to 146.5mm of opportunistic (i.e., not rateable) buybacks through YE2022 (note). By yesterday, it has already completed 7% of its NCIB (9.7mm shares or $154mm). At the current dividend and share price, we estimate a 2022E total cash return yield of 7% vs. its integrated peers at 8%-11%. We highlight that the remaining NCIB program, if fully executed (137mm shares), is more than enough to offset ConocoPhillips selling pressure (120mm shares remaining, note).

Five-year plan highlights sustained FCF growth, increasing shareholder returns, and improved ESG performance: CVE considers its 2022 budget and base dividends sustainable down to US$45/bbl WTI. This provides ample cushion vs. the current 2022 WTI strip of ~US$70/bbl. We therefore see significant deleveraging and shareholder returns upside should strip prices hold.

  • CVE is guiding for up to 4x dividend growth over time, which would bring its dividend yield to 3.5% (assumes flat share price), in line with its peers at 2.4%-5.3%.

  • It continues to guide to $2.4bln of sustaining capex and expects total capex to trend down to that level by 2025/2026.

  • It is targeting a 5% absolute emissions reduction for 2022-2026, with a strong acceleration to a 35% targeted reduction for 2019-2035. Recall, the Oil Sands Pathways Alliance is targeting a 32% absolute reduction by 2030 (note).

  • Other key ESG targets include: 1) a minimum $1.2bln investment in Indigenous businesses between 2019-2025; and 2) increasing women in leadership roles to 30% by 2030 (currently 18% at the executive level)


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