Merger drives down production costs

Article Excerpt

The price for West Texas Intermediate crude oil fell to a negative $37 U.S. a barrel in April 2020 as the COVID-19 pandemic, combined with a lack of storage space, triggered a massive sell-off of oil futures contracts. Prices have since recovered to around $42 U.S. However, oil demand remains vulnerable as the second wave of COVID-19 could lead to more lockdowns. That has prompted Cenovus to buy rival producer Husky. The merger will help Cenovus drive down its operating costs and set it up for higher profits as oil prices improve with the economy. The company also plans to resume paying dividends after the merger. CENOVUS ENERGY INC. $6.09 remains a buy for patient investors. The company (Toronto symbol CVE; Resources sector; Shares o/s: 1.2 billion; Market cap: $7.3 billion; Dividend suspended in April 2020; Takeover Target Rating: Medium; www.cenovus.com) paid ConocoPhillips (New York symbol COP) $17.7 billion in cash and stock in May 2017 for its 50% stake in the…