19:04:52 EDT Sun 25 Aug 2019
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Energy Summary for Jan. 28, 2019

2019-01-28 20:28 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for March delivery lost $1.70 to $51.99 on the New York Merc, while Brent for March lost $1.71 to $59.93 (all figures in this para U.S.). Western Canadian Select traded at a discount of $9.55, down from a discount of $9.35. Natural gas for February lost 27 cents to $2.91. The TSX energy index lost a fraction to close at 147.59.

Alberta oil sands producer Cenovus Energy Inc. (CVE) added three cents to $10.31 on 7.85 million shares. It got a lovely mention this morning from Credit Suisse analyst Manav Gupta, who started coverage of the stock with an "outperform" rating and a price target of $15. He opined that Cenovus offers "one of the best-levered plays to a crude price rebound." Not only is Cenovus's production about 85 per cent crude oil, but the company also has quite a bit of debt (about $8-billion in net debt as of Sept. 30, 2018). Too much debt can be crushing in a falling price environment, but in a rising price environment, debt-laden companies can bounce higher than their less indebted competitors (because the latter would not have fallen as low in the first place), explained Mr. Gupta. He added that he has a "constructive" view on oil prices because of the Alberta government's mandatory production restrictions, which came into effect on Jan. 1. The cuts have split the energy sector into "haves and have-nots," and Cenovus is one of the haves.

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