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Energy Summary for June 5, 2019

2019-06-05 20:23 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for July delivery lost $1.80 to $51.68 on the New York Merc, while Brent for August, after briefly dipping below $60 for the first time since January, closed at $60.63, down $1.34 (all figures in this para U.S.). Both benchmarks felt the weight of bearish U.S. data and rising global trade tensions. Western Canadian Select traded at a discount of $13.19 to WTI, unchanged. Natural gas for July lost four cents to $2.38. The TSX energy index lost 3.64 points to close at 137.41.

Oil sands producer Cenovus Energy Inc. (CVE) lost 39 cents to $10.36 on 6.62 million shares, on top of the 10 cents it lost yesterday after proposing early tender offers for up to $500-million (U.S.) worth of notes. The notes mature from 2022 to 2047 and represent outstanding debt of $4.35-billion (U.S.), or over two-thirds of Cenovus's total debt of around $8-billion. Cenovus's chief executive officer, Alex Pourbaix, recently told a BNN interviewer that he feels an "urgent need" to get below $7-billion and then eventually to $5-billion, targets that he sees as "well within range" in the short term. Paying off $500-million (U.S.) worth of notes in one swoop would certainly be a sizable step toward these goals. Cenovus has plenty of cash it can use to do this; in the first quarter of 2019, it generated $730-million in free cash flow, after expenses and dividends. Speaking of dividends, Mr. Pourbaix has suggested that once Cenovus meets its debt goals -- perhaps as soon as the company's investor day in October -- it will take a "very hard look" at raising its dividend, which is currently set at five cents quarterly (for a yield of 1.9 per cent). Despite his efforts, Cenovus's stock has tumbled from over $14 in the last six weeks, and closed below $11 on Monday for the first time since February.

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