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Cenovus Energy Inc CVE


Primary Symbol: T.CVE Alternate Symbol(s):  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 Sep 26, 2024 8:52am
283 Views
Post# 36241834

RBC

RBCThese are USD targets and their upside scenario target is US$38.00. GLTA

September 25, 2024

RBC Dominion Securities Inc.
Greg Pardy, CFA (Head of Global Energy Research) (416) 842-7848, greg.pardy@rbccm.com
Rob Mann, CFA (Associate)
(416) 842-7915, robert.mann@rbccm.com

Justin Ho, CFA (Associate)
(416) 842-8375, justin.ho@rbccm.com

Outperform

TSX: CVE; CAD 22.94; NYSE: CVE

Cenovus Energy Inc.
Highlights from RBC Desk Presentation

Our view: Our constructive stance towards Cenovus reflects its capable leadership team, underleveraged balance sheet, and rising shareholder returns on the back of achieving its $4 billion net debt target in July —unlocking 100% payout of excess funds flow. We are maintaining an Outperform rating on Cenovus and our one-year price target of $29 per share.

Key points:

Cenovus Energy presented today to RBC Capital Markets’ Sales & Trading team, with Jon McKenzie (President & CEO), Jeff Lawson (Chief Sustainability Officer), and Evan Campbell (Investor Relations Specialist) in attendance. The discussion delved into a number of topics including Cenovus’ strategic priorities and advantages of its integrated model. Highlights from the company’s presentation are on Page 2.

Free Cash Flow. We peg Cenovus’ 2024 free cash flow at about $4.2 billion (before working capital movements, A&D, and dividends) under our base outlook (US$76 WTI, US$14.76 WCS-WTI, US$23 NYH 3-2-1) and approximately $3.8 billion under futures pricing (US$76 WTI, US$15.08 WCS-WTI, US$22 NYH 3-2-1).

Relative Valuation. Under futures pricing, Cenovus is trading at a debt- adjusted cash flow multiple of 5.0x in 2024 (vs. our Canadian major peer group avg. of 7.0x) and at a free cash flow yield of 9% in 2024 (vs. our peer group avg. of 9%). In our minds, Cenovus should trade at a modest discount valuation vis-a-vis our peer group, reflective of its capable leadership team, strong balance sheet, 100% payout of excess funds flow to shareholders and mixed downstream operating performance.



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