Cenovus adds to oil sands

Article Excerpt

CENOVUS ENERGY, $26.18, remains a buy for long-term gains. The company (Toronto symbol CVE; Shares outstanding: 2.0 billion; Market cap: $51.6 billion; TSINetwork Rating: Extra Risk; Dividend yield: 1.6%; www.cenovus.com) has agreed to buy the 50% of the Sunrise oil sands property in northern Alberta that it doesn’t already own from U.K.-based oil giant BP plc (New York symbol BP). In exchange, Cenovus will pay $600 million in cash, plus up to an additional $600 million over the next two years. The company will also transfer its 35% in the undeveloped Bay du Nord project offshore project near Newfoundland to BP. Owning 100% of Sunrise will make it easier for Cenovus to increase the project’s daily output from 50,000 barrels currently to 60,000 barrels over the next few years. In the latest quarter, the company produced an average of 798,600 barrels a day (82% oil, 18% natural gas). The new operations should also immediately add to its cash flow. Cenovus is a buy. buy. …

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