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Cenovus (CVE) to Restart West White Rose Project in Canada
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Cenovus Energy Inc. (CVE - Free Report) and partners decided to resume the West White Rose project off Newfoundland and Labrador’s coast after remaining suspended for two years due to the pandemic.
The West White Rose project’s construction work, which is about 65% complete, will fully resume next year. Cenovus and partners have worked to significantly de-risk the project in the past 16 months.
The first oil from the West White Rose project is expected to be achieved in 2026. Peak production is anticipated to reach 80,000 barrels per day by 2029-end. Notably, the project is expected to obtain 200 million barrels of light crude oil and extend the field’s life by 14 years.
The restart decision follows an agreement between Cenovus and energy giant Suncor Energy Inc. (SU - Free Report) to restructure their working interests in White Rose and Terra Nova fields. Cenovus decreased its stake in the White Rose project, while partner Suncor received an increased working interest.
Cenovus reduced its stake in the White Rose field from 72.5% to 60%, while the same in the satellite extensions was decreased to 56.375% from 68.875%. Per the agreement, Suncor’s stake in the offshore field rose to 40% from 27.5%. Suncor will receive a cash payment of C$50 million from Cenovus in exchange for increasing its stake in the project.
The upward march in oil prices brought back profitability in the oil-producing province and raised government revenues. The Newfoundland and Labrador government supports the restart decision as the project is expected to create 250 permanent platform jobs, and up to 1,500 direct and indirect employment opportunities.
The resumption of the West White Rose project can enable Cenovus to attain its target to achieve compound annual production growth of 2-3% from 2020 to 2024. It provides superior value for the company’s shareholders compared with the opportunity of withdrawing and decommissioning. Cenovus cited that its decision was influenced by an amended royalty structure, which will protect the project’s finances amid volatile commodity prices.
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. Its stock has gained 92.6% compared with the industry’s 78.7% growth.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
Cenovus currently flaunts a Zack Rank #1 (Strong Buy).
Marathon Petroleum Corporation (MPC - Free Report) is a leading independent refiner, transporter and marketer of petroleum products. MPC repurchased shares worth $2.5 billion during the February-April period and completed around 80% of its target to buy back $10 billion in common stock.
Last year, Marathon Petroleum sold its Speedway business to Japan-based retail group Seven & i Holdings, owner of the 7-Eleven convenience store chain, for $21 billion. Apart from providing MPC with a much-needed cash infusion, the disposal of its Speedway-branded gas stations came with a supply agreement, per which it will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream.
EQT Corporation (EQT - Free Report) is a pure-play Appalachian explorer, which is one of the largest natural gas producers in the United States. For 2022, EQT expects a free cash flow of $1.4-$1.75 billion, suggesting an increase from $934.7 million last year.
Almost 65% of its production in 2022 is hedged, thereby securing the best risk-adjusted upside in natural gas. EQT Corporation has lower exposure to debt capital than composite stocks belonging to the industry. Hence, EQT can rely on its strong balance sheet to sail through the volatility in commodity prices.
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Cenovus (CVE) to Restart West White Rose Project in Canada
Cenovus Energy Inc. (CVE - Free Report) and partners decided to resume the West White Rose project off Newfoundland and Labrador’s coast after remaining suspended for two years due to the pandemic.
The West White Rose project’s construction work, which is about 65% complete, will fully resume next year. Cenovus and partners have worked to significantly de-risk the project in the past 16 months.
The first oil from the West White Rose project is expected to be achieved in 2026. Peak production is anticipated to reach 80,000 barrels per day by 2029-end. Notably, the project is expected to obtain 200 million barrels of light crude oil and extend the field’s life by 14 years.
The restart decision follows an agreement between Cenovus and energy giant Suncor Energy Inc. (SU - Free Report) to restructure their working interests in White Rose and Terra Nova fields. Cenovus decreased its stake in the White Rose project, while partner Suncor received an increased working interest.
Cenovus reduced its stake in the White Rose field from 72.5% to 60%, while the same in the satellite extensions was decreased to 56.375% from 68.875%. Per the agreement, Suncor’s stake in the offshore field rose to 40% from 27.5%. Suncor will receive a cash payment of C$50 million from Cenovus in exchange for increasing its stake in the project.
The upward march in oil prices brought back profitability in the oil-producing province and raised government revenues. The Newfoundland and Labrador government supports the restart decision as the project is expected to create 250 permanent platform jobs, and up to 1,500 direct and indirect employment opportunities.
The resumption of the West White Rose project can enable Cenovus to attain its target to achieve compound annual production growth of 2-3% from 2020 to 2024. It provides superior value for the company’s shareholders compared with the opportunity of withdrawing and decommissioning. Cenovus cited that its decision was influenced by an amended royalty structure, which will protect the project’s finances amid volatile commodity prices.
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. Its stock has gained 92.6% compared with the industry’s 78.7% growth.
Image Source: Zacks Investment Research
Zacks Rank & Other Stocks to Consider
Cenovus currently flaunts a Zack Rank #1 (Strong Buy).
Investors interested in the energy sector might look at the following companies that also presently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Marathon Petroleum Corporation (MPC - Free Report) is a leading independent refiner, transporter and marketer of petroleum products. MPC repurchased shares worth $2.5 billion during the February-April period and completed around 80% of its target to buy back $10 billion in common stock.
Last year, Marathon Petroleum sold its Speedway business to Japan-based retail group Seven & i Holdings, owner of the 7-Eleven convenience store chain, for $21 billion. Apart from providing MPC with a much-needed cash infusion, the disposal of its Speedway-branded gas stations came with a supply agreement, per which it will supply 7.7 billion gallons of gasoline per year to 7-Eleven, thus ensuring a steady revenue stream.
EQT Corporation (EQT - Free Report) is a pure-play Appalachian explorer, which is one of the largest natural gas producers in the United States. For 2022, EQT expects a free cash flow of $1.4-$1.75 billion, suggesting an increase from $934.7 million last year.
Almost 65% of its production in 2022 is hedged, thereby securing the best risk-adjusted upside in natural gas. EQT Corporation has lower exposure to debt capital than composite stocks belonging to the industry. Hence, EQT can rely on its strong balance sheet to sail through the volatility in commodity prices.