Cenovus Energy (CVE.TO)

Their Q1 production was 488,000 boe/day because of all their acquisitions but they reported losses from their hedge book. Their operating margin was $157 million cash versus $305 a year before, but they spent $522 million. The company has $9.8 billion of debt, up from 9.5 billion at the end of December. They have about a half billion dollars of assets for sale. They have $19.4 billion of equity. Book value (ex goodwill) is about $13.92, which is higher than the stock price. The dividend is about 5 cents per quarter. They have a new CEO. It is not clear where their growth will be. Schachter thinks they should focus on their thermal operations and get rid of their conventional-world assets. He is concerned about the balance sheet. The debt to equity ratio looks tolerable. He compared it to Whiting Petroleum, Chesapeake Energy and WPX Energy, all well-known American energy companies that are treated as very exciting but have much worse balance sheets. He sees the Canadian energy companies as value stories compared to the American ones. The bargains are in Canada.

He expects the heavy oil differential to have recovered in a year’s time. Yield %. (Analysts’ price target is $ )

He does not see any improvement in the technical chart – it is still in a down trend. There is some evidence of a bottom formation, but it is early. He would take profit above $11. He is weary of this one.

They put some hedges on and then the differentials blew out. A lot of US investors are taking positions right now. Crude by rail contracts are being signed. Keystone could get up and going any minute now. They bought the best oil sands properties. Eventually you will see this company recover.

CPG-T vs. CVE-T. Seasonality starts Feb 25^th. Today they announced a draw from inventory rather than a build. This might be enough to get this one going. He would prefer CVE-T a little bit more.

Since the acquisition almost 3 years ago they have made divestitures and paid the debt down. You could do worse.

She is not buying energy now because of her overall negative view of the Canadian energy market at this time. If she was going to buy at this time, she would buy a large producer (which Cenovus is) but she would prefer CNQ because it is more diversified a

Leery at $9 level. If it closes below $9 it's got plenty of room to fall.

He is negative on the commodity space generally and has not participated in the rise in oil and gas prices. He doesn’t see the rise as based on fundamentals and sees high geopolitical risk. Strongly prefers US Oil and Gas companies over Canadian ones at this time.

Has looked through all the energy companies on both sides of the border to see if he could find some value. He didn't find much, which is peculiar, because he had expected he would find more stuff in the US. However, they are just as reluctant to raise earnings forecasts (his FMV) as are Canadian analysts. This one is cheap, and selling at a 36% discount to its BV. It’s 1.53% dividend is covered. It needs some earnings in order to turn and give it some earnings momentum, then he thinks the stock would go pretty quickly to $17. However, it does need that momentum.

They got into trouble last year. They paid a lot of money for an acquisition. They have since sold a lot of assets and de-levered. 7% cash flow yield vs. 4% for the group. They will have torque to an energy cycle that he feels in its early stages. (Analysts’ target: $15.00).

She is very low on energy weighted stocks. It’s not conducive for strength in cash flow and pricing in the US producers. The large cap ones, including this one, have done relatively better than smaller oil producers.

An integrated oil company. They bought out a partner in their oil sands deal. Took on a lot of debt, but did an equity issue, which didn't go very well. Lost their CEO but there is a new one in. They have to bring down their cost structure and thinks that is going to happen. They'll sell off some assets in the next little while and bring down their debt. Trading at 4.7X cash flow. Dividend yield of 1.7%. (Analysts' price target is $15.)

When they made their big acquisition he wondered what they were doing. They destroyed their balance sheet. It’s becoming a show me stock. There are better quality names to choose from.

He would not have predicted that the differential would blow out. Most of the damage in the stock is temporary because of the differential. He can see costs coming down in 2-3 years time. Dividend yield of 1.8%. (Analysts price target is $16.)