CENOVUS ENERGY $32.47 - Toronto symbol CVE

CENOVUS ENERGY $32.47 (Toronto symbol CVE; Shares outstanding: 754.7 million; Market cap: $24.5 billion; TSINetwork Rating: Extra Risk; Dividend yield: 2.7%; 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, which could start up in 2017, is expected to produce 130,000 barrels a day (Cenovus’s share is 65,000 barrels). To put that in context, Cenovus produced an average of 156,850 barrels a day in the first quarter of 2012. The property’s reserves should last 40 years.

The company plans to use a new technique, called a solvent-aided process, to extract the oil from Narrows Lake. That will add to the project’s development costs, but it should let the partners recover up to 15% more oil than they could using today’s methods.

Cenovus is a buy.

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