Tags: Cenovus | Energy | oil | CVE

Cenovus Energy Could Profit Big On High Oil

By    |   Thursday, 23 February 2012 10:55 AM

Canadian company Cenovus Energy (CVE) is reaching operational levels on its upstream and energy refining resources at a time when the company may be able to land big profits from higher production and high oil prices.

Cenovus Energy produces oil and gas in Western Canada from conventional wells, heavy oil and oil sands processing facilities. The company also owns two crude oil refineries in the United States.

The majority of crude oil production is from oil sands processing. Cenovus has a 50-50 partnership with ConocoPhillips (COP) on three of the five oil sands projects the company has operating or under development.

For 2011, Cenovus Energy reported cash flow of $3.3 billion, up 36 percent from $2.4 billion in 2010. Operating earnings for the year were $1.24 billion or $1.64 per share, up 55 percent from $800 million or $1.06 per share.

Total oil and gas production increased by 4 percent on a 13 percent increase in oil sands barrels produced.


Currently, Cenovus has two of its five oils sands projects at significant production levels and expansion continues at those facilities. The company's Pelican Lake heavy oil facility also increased production with room for more growth.

An oil sands project takes 10 or more years to reach profitable production levels. Cenovus has long-term plans for existing and in-development projects which are projected to increase production at double digit rates annually.

The biggest current challenge is limited transport options to move increased oil production from the Canada oil sands regions to refineries.

The Cenovus Energy board of directors increased the quarterly dividend by 10 percent to 22 cents per share for the first quarter of 2012. All financial results released by the company are in Canadian dollars.

Recently the analysts at TD Securities upgraded Cenovus Energy to a buy from the previous neutral rating. Of the 12 analysts which provide ratings on the stock, half have a hold rating and half a buy rating.

The company next reports on April 27.

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Thursday, 23 February 2012 10:55 AM
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