The Successful Investor Hotline – Friday, September 24, 2010

Article Excerpt

CENOVUS ENERGY INC., $28.74, Toronto symbol CVE, has received regulatory approval to expand its Foster Creek oil-sands project in northern Alberta. Cenovus owns 50% of this project; U.S.-based oil company ConocoPhillips (New York symbol COP) owns the other 50%. The company will expand Foster Creek in three phases over the next seven years. When the expansion is finished, Foster Creek’s average daily production will rise to 210,000 barrels from the current 120,000 barrels. Cenovus has also asked for approval for a fourth phase, which would bring Foster Creek’s average daily production up to 235,000 barrels, starting in 2019. Cenovus’ share is 117,500 barrels. To put these figures in context, Cenovus’ average daily production, including natural gas, was 253,733 barrels in its latest quarter. Extracting the tar-like bitumen from oil sands is much more expensive than conventional oil wells. However, new technologies, such as steam-assisted gravity drainage (SAGD), are lowering Cenovus’ costs. SAGD systems inject steam into the ground to melt the bitumen…