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Cenovus Energy Inc (USA) (NYSE:CVE), Is It A Buy, Sell Or Hold?

Boston, MA 01/27/2014 (wallstreetpr) – Is Cenovus Energy Inc (USA) (NYSE:CVE), a ‘Buy’, ‘Hold’ or ‘Sell’? Even the analysts cannot make up their mind. While the majority still rate it a ‘Buy’, there are some analysts who have rated it a ‘Sell’.

What Is Cenovus Energy?

Cenovus Energy Inc (USA) (NYSE:CVE) is a Canadian integrated oil company.  It focuses on oil sand projects requiring specialized methods to drill and extract crude oil. The company has two steam assisted gravity drainage projects apart from several other projects in various stages of development. Cenovus Energy also holds 50% stake in tow oil refineries. It is also into natural gas drilling and extraction business. The company has earned expertise in these highly specialized operations.

It is also widely recognized as one of the top corporate citizens and has been included in three rankings of the most sustainable companies in the world.

Issues Facing The Company:

There are two main issues facing Cenovus Energy Inc (USA) (NYSE:CVE). The first one suggests that the steam assisted gravity drainage projects consume more energy than their output. While higer costs of oil may help such companies tide over this, can it continue for long?

The second one is the perception of oil sand mining. It is being regarded as ‘dirty’ meaning it again pollutes more than required more than what is acceptable.

Both are matters of perception. It is expected that oil sands production will double in the next decade in Canada and some surveys find that 65% of the Canadians do not view this as ‘dirty oil’. The Alberta-to-Texas Keystone XL project is of prime importance as it will be able to deliver oil to the hungry American country. Doubts have been voiced on the economics of this project. The current high prices of crude oil may have resulted in better profits but these have been squeezed by higher cost of production.

It still remains to be seem whether Cenovus Energy Inc (USA) (NYSE:CVE) can weather the storm.

Published by Steve Hackney

Steve Hackney is a corporate finance professional with over 14 years of experience in cash management and investing. He earned a Bachelor of Science in Finance from Florida State University and holds a Certified Treasury Professional certification. Steve lives in Orlando, Florida with his family.

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