Topic: How To Invest

The Successful Investor Hotline – Friday, April 8, 2022

Article Excerpt

CENOVUS ENERGY INC., $22.12, Toronto symbol CVE, remains a buy for long-term gains. On January 1, 2021, the company completed its acquisition of rival oil producer Husky Energy Inc. (Toronto symbol HSE) in a friendly all-stock takeover. The combined firm is now Canada’s third-largest producer of oil and natural gas, and the country’s second-largest refiner. Cenovus announced this week that it would end its oil hedging program, which it uses to pre-sell its future production at a set price. However, due to a rise in crude prices over the past year, the company is selling those barrels well below the current market price. As a result, Cenovus expects to record a $970 million loss on all its current hedging contracts. As well, realized losses for the first quarter of 2022 will total about $410 million. To put that in context, its cash flow was $7.25 billion, or $3.54 a share, in 2021. The company expects to close out its remaining hedges over the next two…