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Cenovus Energy (CVE) PT Cut To $44 By CIBC After Q1, 'Sector Outperformer' Maintained

 April 26, 2012 02:38 PM


(By Balaseshan) CIBC World Markets Inc. lowered its price target on shares of Cenovus Energy Inc. (NYSE:CVE) to $44 from $45, while maintaining its "Sector Outperformer" rating.

After the company's first quarter results, the brokerage raised its 2013 EPS estimate to $2.39 from $2.34 and its 2014 estimate to $2.58 from $2.51 while maintaining its 2012 estimate of $2.12.

CVE reported Q1 cash flow per share of $1.19, slightly ahead of CIBC's estimate of $1.16, and beating consensus of $1.12. Operating EPS of $0.45 were lower than CIBC's estimate of $0.51 and consensus of $0.53. Variances in EPS stem from higher-than-expected taxes and non-cash financing-related charges.

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CVE's production averaged 262,850 Boe/d in the quarter, slightly ahead of CIBC's estimate and consensus of 258,000 Boe/d. Production increased 3% on a sequential basis and 7% year-over-year. Collectively, production from FCCL was 82,000bbl/d, up 9% year-over-year. Liquids growth (9%) offset gas declines (4%) sequential.

Price realizations in the oil sands took a major hit as Canadian heavy crudes continue to see meaningful discounts to WTI. FC saw reasonable realizations of $70.71/Bbl, CL's Dilbit Blend (CDB) fared worse realizing only $52.58/Bbl, highlighting the importance of CVE's integrated strategy.

Overall, CVE's quarter was strong but CIBC was disappointed with lack of progress on the Telephone Lake JV. The firm has reduced its valuation of Telephone Lake slightly reflecting lower odds of a meaningful JV. Its revised PT is $44/share, in-line with its revised valuation.

[Related -Cenovus Energy (CVE) Upgraded To 'Sector Outperformer' By CIBC]

Cenovus Energy, an integrated oil company, engages in the development, production, and marketing of bitumen, crude oil, natural gas, and natural gas liquids (NGLs) in Canada with refining operations in the United States.

CVE is trading up 0.58% at $34.58 on Thursday

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