The market has shown itself to be see-sawing on the idea of a sustained oil price rebound, with some investors and analysts suggesting that an oil price rebound is on the horizon and others adamant that oil has peaked and we are now on the home stretch with respect to a new world which will be increasingly fueled by renewable energy and less reliant on fossil fuels.
Cenovus Energy Inc. (TSX:CVE)(NYSE:CVE) is a Canadian oil sands producer which has proven to be very sensitive to oil prices, and is thus a company many investors consider when looking to play oil prices in Canada.
Many analysts have noted the reliance of Cenovus on oil prices, relative to its peers on the oil & gas sector.
Each oil & gas company is sensitive to commodity prices to different degrees, however, due to the nature of Cenovus' asset base as well as the fact that the company recently doubled down on its conventional oil assets by agreeing to purchase the remaining 50% stake in oil assets from ConocoPhillips in March for $17.7 billion, Cenovus stands to lose big should oil prices remain depressed or drop further from current levels.
The recent asset purchase made by Cenovus is one which has largely been dismissed by the market as a very bad move, both in terms of timing as well as the price the company paid for the assets.
With multinational investors fleeing the Canadian oil sands in droves, doubling down on low-value oil sands assets and paying full pop has enticed many investors to simply look elsewhere for an oil play. I tend to agree.
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