Back to top

Image: Bigstock

Cenovus (CVE) Scores Deal to Divest Alberta's Tucker Assets

Read MoreHide Full Article

Cenovus Energy Inc. (CVE - Free Report) entered an agreement to divest its Tucker thermal asset to an undisclosed buyer for C$800 million.

Located in northeastern Alberta, Tucker is one of the four producing oil-sand fields operated by Cenovus. Next year, Tucker is expected to produce an average of 18,000-21,000 barrels per day.

Cenovus established an interim net debt target of C$10 billion, which it is planning to meet by divesting assets not central to its core operations. The company also has a strong focus on returning capital to shareholders. Notably, Cenovus will use the proceeds from the transaction to reduce the debt burden and improve its ability to raise shareholder returns.

Cenovus mentioned that it expects to generate about C$2 billion from asset divestments in 2021, including the Tucker transaction. In November, Cenovus agreed to divest its retail fuels network and assets in Wembley in two separate deals worth $660 million as part of plans to offload non-core assets to repay debt.

The latest transaction is another indication of Cenovus delivering on opportunities to optimize its portfolio. With several divestments announced this year, Cenovus has reached its asset sale commitment for 2021, making the company well-positioned to focus on high-return opportunities in the portfolio. The transaction is expected to complete in January 2022, subject to customary closing conditions.

Company Profile & Price Performance

Headquartered in Calgary, AB, Cenovus is a leading integrated energy company.

Shares of the company have outperformed the industry in the past six months. The stock has gained 22.4% compared with the industry’s 9.4% growth.

 

Zacks Investment ResearchImage Source: Zacks Investment Research

 

Zacks Rank & Stocks to Consider

Cenovus currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips (COP - Free Report) primarily engages in the exploration and production of oil and natural gas. Considering proved reserves and production, COP is the largest explorer and producer in the world. ConocoPhillips ended 2020 with proved reserves of 4.5 billion barrels of oil equivalent (BOE) and a reserve replacement ratio of 86%. Through 2020, the upstream energy player produced 1,127 thousand BOE per day, comprising more than 50.4% oil.

ConocoPhillips is projected to see a year-over-year earnings surge of 717.5% in 2021. COP witnessed seven upward revisions in the past 60 days. ConocoPhillips recently acquired stakes in the Permian Basin from Shell for $9.5 billion. The acquisition involves 225,000 net Permian acres, with current production of nearly 175,000 barrels of oil equivalent per day. This made ConocoPhillips one of the leading producers in Permian.

Canadian Natural Resources Limited (CNQ - Free Report) is one of the largest independent energy companies in Canada. CNQ has a broad portfolio of low-risk exploration and development projects with a strong international exposure, which yields long-term volume growth at above-average rates. As 2020 end, CNQ had approximately 12.106 billion oil-equivalent barrels (BOE) in total proved reserves.

Canadian Natural Resources’ earnings for 2021 are expected to surge 1,085.4% year over year. CNQ currently has a Zacks Style Score of B for both Growth and Momentum. CNQ raised its dividend by 25% in November, reflecting strength in its cash flows. The company is counted as a ‘Canadian Dividend Aristocrat’ with an attractive yield. What’s more, Canadian Natural Resources has a solid track record of dividend hikes, increasing the payout for 22 consecutive years.

PDC Energy is an independent upstream operator that engages in the exploration, development and production of natural gas, crude oil, and natural gas liquids. PDCE, which reached its present form following the January 2020 combination with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDC Energy’s total estimated proved reserves were 731,073 thousand barrels of oil equivalent.

PDCE’s earnings for 2021 are expected to surge 286.7% year over year. In the past 60 days, the Zacks Consensus Estimate for PDC Energy’s 2021 earnings has been raised by 25%. PDCE beat the Zacks Consensus Estimate in the last four quarters, with an earnings surprise of 51.06%, on average.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ConocoPhillips (COP) - free report >>

Cenovus Energy Inc (CVE) - free report >>

Canadian Natural Resources Limited (CNQ) - free report >>

Published in