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    CVE   CA15135U1093

CENOVUS ENERGY INC.

(CVE)
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Cenovus Energy CEO 'not worried' about Husky deal approval as results disappoint

10/29/2020 | 01:21pm EDT
FILE PHOTO: Rows of steam generators line a road at the Cenovus Energy Christina Lake SAGD project south of Fort McMurray, Alberta, Canada

(Reuters) - The chief executive of Cenovus Energy said he is confident shareholders will approve its acquisition of rival Husky Energy, despite big quarterly losses and a stock sell-off.

Cenovus and Husky lost more money than analysts expected and took impairment hits in the third quarter, the companies said on Thursday, adding concerns to a C$3.6 billion ($2.73 billion) merger announced days earlier.

Cenovus stock fell 6.5% while Husky's fell 7%, both among the top percentage decliners on S&P/TSX Composite Index. Cenovus is down 12% since announcing the deal Sunday, including an 8% selloff on Monday.

The deal requires approval by shareholders of both companies.

"I'm not very worried," Cenovus Chief Executive Alex Pourbaix told Reuters. "What you saw on Monday was a lot of people with very short-term bias get out of the stock. I'm quite happy to replace those investors with investors with a longer-term view."

COVID-19-related lockdowns have floored fuel demand and added to the woes of Canada's energy sector, pushing companies to look at consolidation and layoffs.

Len Racioppo, managing director of Cenovus shareholder Coerente Capital Management, said acquiring Husky and its refineries "watered down" the bet he made on oil prices rising through owning Cenovus, which mainly has production assets.

Husky reported a C$7.08 billion net loss compared with a year-ago profit of C$273 million, hurt by a C$6.7 billion impairment related to lower long-term price assumptions and reduced capital spending.

Husky's loss of 38 Canadian cents per share excluding items was bigger than analysts' average estimate of 24 Canadian cents, according to Refinitiv IBES.

Excluding items, Cenovus's 37 Canadian cents per share loss was wider than the expected 6 Canadian cents. It booked a C$450-million impairment on a U.S. refinery.

Credit Suisse analysts said Husky's struggle to generate free cash flow will weigh on the combined company.

($1 = 1.3186 Canadian dollars)

(Reporting by Arunima Kumar and Shariq Khan in Bengaluru and Rod Nickel in Winnipeg; Editing by Ramakrishnan M., Alexandra Hudson)

By Arunima Kumar and Rod Nickel


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
CENOVUS ENERGY INC. 2.14% 14.81 Delayed Quote.91.10%
CREDIT SUISSE GROUP AG -0.10% 9.756 Delayed Quote.-14.33%
LONDON BRENT OIL -0.57% 85.56 Delayed Quote.65.76%
S&P/TSX COMPOSITE INDEX 0.32% 21284.84 Delayed Quote.21.70%
WTI -0.70% 83.233 Delayed Quote.70.78%
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Analyst Recommendations on CENOVUS ENERGY INC.
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Financials
Sales 2021 41 316 M 33 382 M 33 382 M
Net income 2021 2 227 M 1 799 M 1 799 M
Net Debt 2021 9 525 M 7 696 M 7 696 M
P/E ratio 2021 13,1x
Yield 2021 0,50%
Capitalization 29 881 M 24 158 M 24 143 M
EV / Sales 2021 0,95x
EV / Sales 2022 0,81x
Nbr of Employees 2 413
Free-Float 65,3%
Chart CENOVUS ENERGY INC.
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Cenovus Energy Inc. Technical Analysis Chart | CVE | CA15135U1093 | MarketScreener
Technical analysis trends CENOVUS ENERGY INC.
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 19
Last Close Price 14,81 CAD
Average target price 18,61 CAD
Spread / Average Target 25,7%
EPS Revisions
Managers and Directors
Alexander J. Pourbaix President, CEO & Non-Independent Director
Jeffrey R. Hart Chief Financial Officer & Executive Vice President
Keith A. J. MacPhail Chairman
Jonathan M. McKenzie Chief Operating Officer & Executive Vice President
Richard J. Marcogliese Independent Director
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