Cenovus Energy (CVE.TO)

A couple of bad years in terms of an oil sands asset to be developed over decades are okay. They doubled production since being spun out of ECA-T. The company is going in the right direction, but the stock price has not followed. Their commitment to their dividend is superior.

Thinks there is good long term value in this stock but their “steam to oil” ratio has been moving higher, which is not good. Expects this to peak in Q3 and fall to more normalized levels, which should help the stock. Ultimately he would be using weakness to be buying. Good balance sheet and debt to cash flow at about 1 times. Trades in line with its peers. Nice safe dividend.

Oil has come down, but take the exchange rate into account and these guys are going to make money. Prefers CNQ-T and SU-T however.

Will it spin off its royalty assets? A number of companies have done so and the market is prepared to pay up. This company could do so. This has quite a good growth profile. He would prefer Suncor (SU-T) and Canadian Natural Resources (CNQ-T).

This is more the oil side of the old Encana (ENC-T). Good company. Hasn’t done much because of the commodity price. She is getting a little more interested in Canadian Natural Resources (CNQ-T).

(A Top Pick Aug 15/13. Up 20.54%.) The catalyst for them was bringing production on. There was a bit of concern on their steam/oil ratio which spiked up, but has now flattened out. It will take a little while for it to go back down, but it is under control now. Getting great cash flow from their refinery on the joint venture.

Thinks this stock was punished because of operational issues. There are higher costs at Foster Creek. Thinks this is going to recover. Likes the growth profile as well as the integration with the downstream.

We are going to see them going from about 270,000 barrels a day to over 300,000 in the next couple of years. They have a target of over 500,000 in 2020-2021. The growth profile is never guaranteed, but they have already identified projects where this could come to light. They have not really participated with the other oil companies in the energy boom. He sees earnings going well over $2-$2.20 in the next year or two. Yield of 3.13%.

This is expensive, relative to CNQ and Suncor (SU-T). Yesterday’s close was $33.23 and his model price is $32.37, a negative 2%, so it is basically trading right on where he believes FMV is. A nice yield at 3.2%.

Had liked this for a while because it was a bit slower in growth, but the last quarter was really impressive. Production growth has started to come back, and on the heavy side the spreads have narrowed a little bit. 3.2% dividend yield.

Has lagged the seniors. Struggled with production targets. Using more steam to get the oil out. He thinks a lot of that is behind it. It is going to be dull and boring, but for a two to three year hold you will do quite well. Prefers CNQ, but don’t sell it if you own it.

Definitely a good stock to hold. He has it because of their very, very well defined business plan. Shareholder friendly in that they return money in the form of dividends. Likes the growth opportunities. Good balance sheet.

His favourite play in the oil sands. The PrairieSky (PSK-T) thing got him really thinking about all the drillable land this company has. They can do exactly the same kind of a sell-out, and it would be a great idea for them. There is hidden value here. Have a great spread of properties. He could see $37. There is a 3% dividend yield.

He would like to own this for older clients, but the yield is only 3%. Has been looking at the ones that would give him more of a yield, but at the same level of growth. However, on the overall energy picture, he thinks this is a great investment. Reserve life is big and is going to continue.

Short Term? Northern Iraq has impacted the price of oil. If you are looking for fast money, don’t go to this one. Hampered by operational challenges. It comes down to cash flow growth. Compare to CNQ-T where it will grow faster, or SU-T.