Cenovus Energy favourite offers exceptional growth, operational scale, and shareholder-friendly capital allocation. The company stands at an inflection point where multi-year capital investments are transitioning into substantial cash flow expansion beginning in 2026, creating significant upside potential at its current valuation.
A pending major acquisition represents transformational strategic positioning and could deliver critical competitive moats including shared infrastructure and supply chain efficiencies.
Meanwhile the stock trades at just 6.4 times forecast cash flow per share and yields a solid 3.2%.
CENOVUS ENERGY INC. (Toronto symbol CVE; www.cenovus.com) is Canada’s third-largest producer of oil and natural gas after Canadian Natural Resources and Suncor. That follows its all-stock acquisition of rival oil producer Husky Energy Inc. (Toronto symbol HSE) on January 1, 2021. Cenovus also operates refineries in Canada and the U.S.
Cenovus recently again raised its takeover offer for MEG Energy Corp. (Toronto symbol MEG) by about 2%. Note—the company already owns 9.8% of MEG’s shares.
MEG operates an oil sands property near Cenovus’s operations at Christina Lake in northern Alberta. The deal will increase Cenovus’s production by 110,000 barrels a day. To put that in perspective, Cenovus produced a record 832,900 barrels a day (82% oil, 18% gas) in the third quarter of 2025. That’s up 8.0% from 771,300 barrels a year earlier.
Under this latest offer, MEG shareholders will have the option to receive $30.00 in cash or 1.255 Cenovus common shares for each MEG share they hold. Cenovus will limit the overall cash portion to 50%, so most MEG investors will receive $15.00 in cash and 0.6275 of a Cenovus common share.
Based on Cenovus’s current share price, the newest offer is worth roughly $7.6 billion.
Strathcona Resources Ltd. (Toronto symbol SCR), which holds 14.2% of MEG’s shares, has agreed to support the revised offer.
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MEG shareholders have juts approved the offer, and Cenovus now expects to complete the acquisition by the end of 2025.
Meantime, to help offset the cost of buying MEG, the company has agreed to sell its 50% stake in two U.S. refineries (Wood River refinery in Illinois and the Borger refinery in Texas) to its partner Phillips 66 (New York symbol PSX) for $1.4 billion U.S. Cenovus expects to complete both transactions by the end of 2025.
Cenovus’s shareholders gain from a low valuation and a solid yield
Despite higher production, lower crude prices cut Cenovus’s revenue in the quarter ended September 30, 2025. by 4.5%, to $13.20 billion from $13.82 billion a year earlier. That missed the consensus forecast of $13.46 billion.
However, thanks to better results at its refineries, cash flow in the quarter jumped 25.8%, to $2.47 billion from $1.96 billion. Cash flow per share gained 31.4%, to $1.38 from $1.05, on fewer shares outstanding.
Cenovus’s cash flow per share will probably total $3.97 in 2025, and the stock trades at an attractive 6.4 times that forecast. The $0.80 dividend yields 3.2%.
Recommendation in The Successful Investor: Cenovus Energy Inc. is a buy.
