Quantcast

Will Cenovus (CVE) Gain From C$625M Pipestone Business Sale?


Shutterstock photo

Cenovus Energy Inc. CVE announced plans to divest its Northwestern Alberta-based natural gas rich assets in an effort to trim debt. The transaction is valued at C$625 million and will likely conclude in the September quarter of 2018.  

Although Cenovus Energy has not disclosed the name of the buyer, NuVista Energy Ltd has confirmed the acquisition.

Cenovus added that the to-be-divested Pipestone and Wembley natural gas and liquids business produced 8,800 barrels of oil equivalent per day (BOE/d) through the January-to-June period of 2018. It is to be noted that of the total production, natural gas comprises 55%. Over the same period, the company generated C$22 million of operating margin from Pipestone operations. In the same deal, Cenovus will be selling the 39% stake of the Pipestone business in the Wembley unit that processes natural gas.

Cenovus has been getting rid of properties to strengthen its balance sheet that records total debt of nearly $9 billion as of Jun 30, 2018. Notably, the company significantly levered its balance sheet after acquiring oil sands assets along with natural gas resources in western Canada from ConocoPhillips COP in 2017. Cenovus Energy revealed that it is looking for opportunities to divest other non-core acres in the Deep Basin regions which got sufficient interest from the buyers.

Calgary, Canada-based Cenovus is a leading integrated energy firm. However, the stock's 24.1% rally over the past year failed to outperform the 25.9% collective gain of the stocks belonging to the industry .

Presently, the company carries a Zacks Rank #3 (Hold). Meanwhile, two better-ranked players in the energy space are McDermott International, Inc. MDR and Murphy Oil Corp. MUR . While Murphy Oil carries a Zacks Rank #2 (Buy), McDermott sports a Zacks Rank #1 (Strong Buy). You can see  the complete list of today's Zacks #1 Rank stocks here .   

McDermott's earnings surpassed the Zacks Consensus Estimate in the last four quarters, the average positive surprise being 101.7%.

Murphy Oil's bottom line surpassed the consensus mark in each of the last four quarters, the average positive surprise being 102.5%.

5 Medical Stocks to Buy Now

Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia, and other conditions.

New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.

Click here to see the 5 stocks >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

McDermott International, Inc. (MDR): Free Stock Analysis Report

Cenovus Energy Inc (CVE): Free Stock Analysis Report

ConocoPhillips (COP): Free Stock Analysis Report

Murphy Oil Corporation (MUR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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
Referenced Symbols: MDR , CVE , COP , MUR



More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research










Research Brokers before you trade

Want to trade FX?