Cenovus Energy (CVE) Voices Concern Over Carbon Capture Aid
Cenovus Energy Inc. (CVE) has taken a firm stance against the Canadian government, expressing dissatisfaction with the level of financial support extended to the oil-sands industry's ambitious C$16.5 billion carbon capture system, per a Bloomberg report.
The federal government's proposed tax credits, covering only half of the capital costs, and Alberta's 12% subsidy have fallen short of Cenovus' expectations. Although Canada offers operating cost support through contracts guaranteeing a profitable carbon price, the accompanying emissions cap has drawn criticism from energy producers.
Rhona DelFrari, Cenovus’s chief sustainability officer, expressed concerns during an investor day presentation, citing a Bank of Montreal study. She highlighted the complexity of Canada's approach, comparing it with the more straightforward strategy employed by the United States.
Oil-sands producers in Canada have collaborated to propose a carbon capture system, aiming to reduce emissions by 22 million metric tons by 2030 and achieve carbon neutrality by 2050. Despite an imminent submission of regulatory documents, concerns persist regarding unclear draft tax credit regulations and a need for better understanding of the carbon price guarantees.
In response to the criticism, a spokesperson for Natural Resources, minister Jonathan Wilkinson, emphasized the government's significant support, citing a recent Mackenzie Wood report. The report asserted that Canada's CCUS (carbon capture, utilization, and storage) incentives surpass those in the United States in terms of both value and certainty.
As the debate between Cenovus and the Canadian government unfolds, the future of the proposed carbon capture system remains uncertain.
Zacks Rank & Key Picks
CVE currently carries a Zack Rank #5 (Strong Sell).
Some better-ranked stocks in the energy sector are Sunoco LP SUN, Murphy USA Inc. MUSA and Energy Transfer LP ET, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sunoco is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. By distributing more than 10 fuel brands via 10,000 convenience stores under long-term distribution contracts, the partnership will continue to generate stable cash flow.
The Zacks Consensus Estimate for SUN’s 2024 EPS is pegged at $4.89. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Murphy USA is a leading independent retailer of motor fuel and convenience merchandise in the United States.
The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $25.58. The company has a Zacks Style Score of B for Growth and B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.
Energy Transfer is a publicly traded limited partnership, focused on diverse energy assets in the United States. The company’s core operations involve natural gas midstream services, transportation, storage, crude oil facilities and marketing assets.
The Zacks Consensus Estimate for ET’s 2024 EPS is pegged at $1.44. The company has witnessed upward earnings estimate revisions for 2024 in the past 30 days. ET’s 2024 earnings are expected to rise 32.1% year over year.
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