Credit SuisseBack to CVE. GLTA
11:10 AM EST, 12/20/2021 (MT Newswires) -- Credit Suisse on Monday reiterated its outperform rating on the shares of Cenovus Energy (CVE.TO) with a C$20.00 following the oil producer and refiner's C$800-million sale of its Tucker thermal oil-sands project last week.
"On 16th December, CVE announced it had reached an agreement to sell its Tucker thermal asset for total cash proceeds of C$800M. Proceeds from this transaction will further accelerate the company's reduction of net debt and enhance its capacity to increase shareholder returns. Including this transaction, the company expects to realize almost C$2Bn of total proceeds from asset sales announced in 2021, well above the guidance of C$1.1Bn issued when CVE closed the acquisition of HSE ... Tucker's operating cost was C$18-$21/bbl which was above Sunrise of C$15-$18/bbl, and also Lloyd Thermal of C$14-$16/bbl. This was the higher cost asset that came with the HSE transaction. Even the royalty rate was a little higher at Tucker (10%-13%) vs. Sunrise (4%-6%) and Lloyd Thermal (6%-9%). In our opinion, its makes sense for CVE to divest these thermal assets which had a lower netback than the rest of Oil Sands portfolio."