Cenovus Grand Rapids Gets Regulatory Nod - Analyst Blog


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Canadian oil company, Cenovus Energy Inc. ( CVE ) announced that it has received approval from the government of Alberta for a new oil sands project. The project, christened Grand Rapids, is located approximately 300 kilometres north of Edmonton, in northern Alberta. Grand Rapids is expected to have production capacity of 180,000 barrels per day (bbls/d) and will be developed in multiple phases. The project is anticipated to have a life of 40 years. Cenovus expects to make a decision on the timing of development later this year.

Cenovus applied for the permit in 2011 after a successful pilot well drilling in the area for its steam-assisted gravity drainage, or SAGD, oil-extraction technique.

The company's total crude oil output last year was 181,000 bbls/d through two existing SAGD operations and conventional production. The two SAGD projects currently producing are both equally owned joint ventures with ConocoPhillips ( COP ), as is the third project now under construction and expected to start commercial production in 2017.

The Grand Rapids project is the fourth and is adjacent to a conventional oil-producing project, Pelican Lake, which produces about 23,000 bbls/d. Cenovus has a fifth SAGD project known as Telephone Lake with a 300,000 bbls/d capacity that is under regulatory review.

Headquartered in Calgary, Alberta, Cenovus is an integrated oil company with ownership interest in two high-quality refineries in Illinois and Texas. Cenovus' operations include increasing oil projects and growing natural gas and crude oil production in Alberta and Saskatchewan.

Cenovus enjoys the benefits of industry-leading oil sands assets that position it for long-term growth. We believe the company will remain focused on improving its operational efficiency initiatives throughout 2014.

Cenovus currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, one can consider better-ranked players in the energy sector like Range Resources Corp. ( RRC ) and Patterson-UTI Energy Inc. ( PTEN ). Both these stocks currently sport a Zacks Rank #1 (Strong Buy).

CONOCOPHILLIPS (COP): Free Stock Analysis Report

CENOVUS ENERGY (CVE): Free Stock Analysis Report

PATTERSON-UTI (PTEN): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
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