Back to top

Image: Shutterstock

Cenovus (CVE) Divests Marten Hills Royalty Interest to Topaz

Read MoreHide Full Article

Cenovus Energy Inc. (CVE - Free Report) recently announced that it has divested its gross overriding royalty in the Marten Hills area to Topaz Energy Corp., a royalty and energy infrastructure company. The deal closed on May 18 and has an effective date of May 1.

Cenovus’ gross cash proceeds from the transaction were C$102 million. This is expected to be used for net-debt reduction. The move is in line with the company’s plan of reducing debt burden through divestment of non-core assets. It intends to reach the interim net debt target of $10 billion with such strategic moves. As of Mar 31, 2021, the Canadian energy player had a long-term debt of C$13,947 million, and cash and cash equivalents of C$873 million.

Importantly, last December, the company sold Marten Hills oil assets in Alberta to Headwater Exploration, a Canadian upstream company. The deal, back then, enabled Cenovus to retain the gross overriding royalty in the area. It also received 50 million Headwater shares through that deal, among other things.

The company — which missed first-quarter earnings estimates due to severe winter in parts of the United States, and planned and unplanned maintenance activities — stated that the latest deal marks the first one of its broader initiative to deleverage the portfolio. It expects total capital expenditure for 2021 in the band of $2.3-$2.7 billion.

Price Performance

The stock has gained 35.9% in the year-to-date period compared with 25.8% rise of the industry it belongs to.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include Suburban Propane Partners, L.P. (SPH - Free Report) , NOW Inc. (DNOW - Free Report) and PHX Minerals Inc. (PHX - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Suburban Propane’s bottom line for 2021 is expected to rise 58.8% year over year.

NOW’s bottom line for 2021 is expected to rise 86.2% year over year.

PHX Minerals’ bottom line for 2021 is expected to surge 40% year over year.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Published in