CENOVUS ENERGY INC. $32 - Toronto symbol CVE

CENOVUS ENERGY INC. $32 (Toronto symbol CVE; Conservative Growth Portfolio, Resources sector; Shares outstanding: 755.6 million; Market cap: $24.2 billion; Price-to-sales ratio: 1.4; Dividend yield: 2.8%; TSINetwork Rating: Extra Risk; www.cenovus.com) has received regulatory approval to develop its Narrows Lake oil sands project in northern Alberta; U.S.-based ConocoPhillips (New York symbol COP) owns 50% of this property.

Narrows Lake could begin operating in 2017. When it reaches full capacity, it should produce 130,000 barrels per day (Cenovus’s share is 65,000 barrels). To put that in context, Cenovus produced an average of 156,850 barrels per day in the first quarter of 2012. Narrows Lake’s reserves should last 40 years.

The company plans to use a new technique, called a solventaided process, to extract the oil from Narrows Lake. This approach will add to the project’s construction and development costs, but it should let the partners recover up to 15% more oil than current methods.

Cenovus is a buy.

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