Cenovus Energy (CVE.TO)

Stock vs. Stock: CVE, CNQ or SU for an oil sands play. Do very little in terms of oil sands, mostly a refining company.

Oil sands volumes were up, but conventional volumes were down. Nat Gas volumes were down, too. Was a disappointment to the street. The issue has been their recovery rates. Balance sheet is in good shape, though. Makes sense to investors in high $20s to $30.

They are working through recent issues. They have great assets and are normally great executors. Thinks this is a stock you can buy and sleep well at night with. Less torquy than other integrated oil names. You have to make sure issues are not with a fundamental asset.

A lot of issues with this. In Q4 they upped their dividend 10%. Great balance sheet. Valuation is reasonable relative to the group. What he doesn’t like is that it has pretty sluggish production growth for the next couple of years. Continue to have operational challenges at Foster Creek. The steam to oil ratio is stubbornly high.

Likes this because it has been depressed. Has gone down with the oil sands effect. Oil sands have a 50 year deposit and you want to buy when assets are cheap. This company is quite cheap because they’ve had some issues with Foster Creek SAGD production. They are going to fix this and in the meantime you have a shareholder friendly management team, a great return on assets and it is now relatively on sale. 3.6% dividend yield.

Had problems at Foster Creek with their SAGD operations and this is finally getting fixed. The back half of this year, each quarter now, should get better. Margins are widening. His one-year target is $33-$35.

(Top Pick Feb 6/13, Down 9.15%) But he really likes this one. A lot of development in the oil sands. Significant additions to production in the next half decade. Decent dividend.

Bought yesterday. In around these price levels it offers tremendous values. Terrific growth profile going forward. One of the better managed companies. Production pace has kept pace with expectations. A little over 6 times forward cash flow. Good balance sheet and an efficient operator. Expects dividend increases.

Rising oil prices are generally good and this one benefits from rising WTI. The key here is that it is a great company, however it has struggled as of late. He would lighten up unless you have a very long term investment horizon. Their guidance has been discouraging even though they bumped the dividend.

Increased dividend at year-end. Markets got spooked about guidance regarding steam/oil ratios at Foster Creek. He has seen this stumble coming for some time so got out.

Has had its troubles. Two refineries in the US lost cash flow because of squeezed margins and they had to pay for renewable identification numbers for ethanol plants. We are down to a base building pattern but it has not picked up at this point. He would wait. There are better opportunities. You want to see it break through its trend line.

Very well run business. Have been struggling a little bit with their Foster Creek project but that is one of the highest class oil sands projects that we have in Canada right now. Cheap to produce and the project has a long life. This will considerably add to their growth in the next few years. A lot of the issues have been short term. You want to hold this for 2-3 years as they ramp up Foster Creek.

Primarily oil assets with a little bit of natural gas. Have SAGD oil sands assets. When they reported, their operating costs were a bit high, partially due to cooler weather. Also, part of it was due to the steam to oil ratio, where they will be pumping their reservoirs with more steam, which adds to the operating costs. When the stock is down at this point, he is not going to give up on it and if it goes much lower, he will add to his position.

A great company. This is probably a good opportunity to add a little bit to your position. Stock has been slow, but you are talking about oil sands development, long lived reserve life and until the market realizes that is something they value, it is going to underperform or go sideways. We are starting to see the foreigners/US investors come back, which is good news.

For a while, this company could do no wrong. They would come out with gangbusters earnings and beat consensus expectations. It was the cream of the crop. Doesn’t think the drop is strictly a Cenovus problem but an oil patch issue. Can’t think of a lot of oil companies that have done extremely well. Dividend is probably not as big as he would like to see.