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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

Comment by Maxmoeon Apr 04, 2022 1:50pm
252 Views
Post# 34573809

RE:Hedgeing oil is like selling your cve stock @ $10.00

RE:Hedgeing oil is like selling your cve stock @ $10.00Your example is very extreme. But yes, theoretically correct. If it costs me $6 a barrel to produce oil and I hedged by selling calls at $10 I'd earn 4 instead of 14 IF it goes to 20. But using the recent oil prices as the context it's more like oil is 100, I hedge my oil price with a cap at $166 (10\6 = 166\100]. Now, would you be in hysterics if oil went to $333 (20/10 = 333/166] and you missed out on this fantasy fairy tale profit for a few months until the hedges wound down? Unlike your stock scenario, cve will be pumping oil at $333 once the hedges run off. They don't run out of production like you can only sell your stock once. And, big AND, cve will be making ungodly amounts of money at 'only' $166 in the few intervening months. Is that calming or do you need to just trade into bell or bmo?  
soundandfury wrote: And then the cve stock rises to $20.00..........if your average cost was say $6.00 you made a $4.00 profit but if you had held your shares you would have got $20.00 for a $14.00 profit instead of $4.00 realized profit.................my 2 cents on hedge losses


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