Well-timed share issues give them options

Article Excerpt

Low oil and natural gas prices continue to hurt cash flow at Cenovus and Encana (see box). In response, both have issued shares to fund new projects and cut debt. The extra shares diluted existing investors’ holdings. However, they strengthened both companies’ balance sheets and put them in a better position to profit when oil and gas prices recover. CENOVUS ENERGY INC. $22 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 824.5 million; Market cap: $18.1 billion; Price-to-sales ratio: 1.1; Dividend yield: 4.8%; TSINetwork Rating: Average) gets 35% of its revenue from its oil sands projects and conventional oil and gas wells in Western Canada. Refining supplies the remaining 65% of Cenovus’s revenue. The company ships its oil to its 50%-owned refineries in Illinois and Texas. Phillips 66 (New York symbol PSX) owns the other 50% of these operations. These refineries help cut Cenovus’s exposure to falling oil prices, as cheaper crude cuts their operating…