Cenovus Swings to Profit in Q3, Doubles Dividend

Cenovus Energy (CVE), a Canadian oil and natural gas producer, reported a profit in the third quarter of 2021 compared to a loss a year ago thanks to higher production and recovery in demand for oil.

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Cash from operating activities came in at C$2.14 billion in the third quarter, nearly three times higher than in the prior-year quarter. Adjusted funds flow increased from C$407 million (C$0.33 per share) to C$2.34 billion (C$1.16 per share) in the quarter ended September 30.

Net income amounted to C$551 million (C$0.27 per share) in Q3 2021, up from a loss of C$194 million (C$0.16 per share) in Q3 2020.

Total upstream production reached 804,800 barrels of oil equivalent per day (boe/d) in the third quarter, up 70.6% from 471,799 boe/d a year earlier. Downstream throughput nearly tripled to 554,100 barrels per day.

Cenovus president and CEO Alex Pourbaix said, “Our outstanding operating and financial results this quarter showcase the strength of our business and demonstrate that we deliver on our commitments. With our C$10 billion net debt target largely achieved, we’re able to take these important steps to increase returns for our shareholders.

“Our free funds flow capacity will support swiftly advancing toward our longer‐term net debt target of less than C$8 billion, while balancing growth in shareholder returns.”

Cenovus doubled its dividend and announced a share buyback plan for up to 10% of its shares. The company said it will now pay a quarterly dividend of C$0.035 per share, up from C$0.0175 per share. (See Insiders’ Hot Stocks on TipRanks)

On October 19, Goldman Sachs analyst Neil Mehta maintained a Buy rating on CVE with a C$14.50 price target. This implies 2.4% downside potential.

Overall, consensus among Wall Street analysts is that CVE is a Strong Buy based on eleven Buys. The average Cenovus Energy price target of C$17.45 implies 17.5% upside potential to current levels.

TipRanks’ Smart Score

CVE scores an 8 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market.