We recently published a list of Billionaire’s 15 Favorite Oil and Gas Stocks Right Now. In this article, we are going to take a look at where Cenovus Energy Inc. (NYSE:CVE) stands against other billionaire’s favorite oil and gas stocks right now.
The oil and gas industry is a significant driver of the global economy, influencing industries, transportation, and geopolitical dynamics. However, the past year has been nothing short of a roller coaster for the sector, with high volatility coming from factors such as geopolitical tensions, natural disasters, supply chain disruptions, and a dampening demand due to a global economic slowdown.
READ ALSO: 11 Best Natural Gas Stocks To Buy Now
Brent crude prices have recently hit a 6-month low as US crude oil stockpiles posted a larger-than-expected build, coupled with worries about a looming return of more OPEC+ barrels to the market and President Trump’s tariffs on Canada, Mexico, and China. The global oil and gas majors have already struggled with decreasing prices in 2024 and the recent decline has only added to their troubles. Things could get even worse, as the IEA expects Brent crude prices to fall further to $66 a barrel in 2026.
Meanwhile, as the US oil and gas production hits record highs, President Trump has made calls to “Drill, Baby, Drill” and pump those numbers up even higher, as he seeks to make the country self-sufficient in energy. However, not everyone seems to be on. Instead of continuously increasing supply and hence plunging prices even lower, the oil industry remains focused on achieving efficiency gains and maintaining capital discipline, while also rewarding loyal shareholders through dividends and share repurchase programs. According to a report by Janus Henderson, companies in the energy sector distributed over $49 billion in dividends during the third quarter of 2024, up from $32.2 billion three years ago.
However, the same cannot be said of the natural gas sector. US gas producers, which curbed production last year due to multi-year low prices, are now adding gas rigs and boosting production as the price has crossed the $4.6 mark this week. The slowing output in 2024, a booming LNG industry, and fast-depleting inventories during the coldest winter in years have driven gas prices up by over 150% over the last year.
Another significant growth driver for America’s natural gas industry is the ongoing artificial intelligence boom and the accompanying data centers, which consume 10 to 50 times the amount of energy per square foot of a typical commercial office building. These energy intensive facilities could consume as much as 9% of all energy generated in the US by 2030, and this energy needs to come from a relatively clean, flexible, and reliable source that is abundantly available in the form of natural gas. According to energy data provider Enverus, a total of 80 new gas power plants could be constructed in America by the end of the decade, adding about 46 GW of new capacity – 20% higher than the gas capacity additions in the last five years. Several gas majors are now even bypassing traditional utilities and building power plants to connect directly to data centers, a move that could reshape the industry in the years to come, if it pays off.
Methodology
To collect data for this article, we scanned Insider Monkey’s database of billionaires’ stock holdings and picked the top 15 companies operating in the oil and gas sector with the highest number of billionaire investors in Q4 of 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A fleet of oil tankers at sea, representing the global reach of a crude oil supplier.
Cenovus Energy Inc. (NYSE:CVE)
Number of Billionaire Holders: 13
Cenovus Energy Inc. (NYSE:CVE) is an integrated oil and natural gas company, based in Calgary, Alberta, with operations that span Canada, the United States, and the Asia Pacific region.
Cenovus Energy Inc. (NYSE:CVE) posted a revenue of approximately $9 billion in Q4 2024, down 7.29% YoY and below market expectations by $1.11 billion, primarily due to lower commodity prices. The company’s EPS of $0.19 also narrowly missed estimates by $0.11. However, CVE delivered quarterly upstream production of 816,000 boed, up 6% QoQ and 1% YoY. Moreover, the company achieved the highest-ever quarterly and annual oil sands production rates at 628,500 boed and 610,700 boed respectively, including record annual rates at both Foster Creek and the Lloydminster thermal assets. Notably, Cenovus generated approximately $1.11 billion of adjusted funds flow in Q4 and returned over $487 million to its shareholders through dividends, share buybacks, and the redemption of its Series 3 preferred shares.
Cenovus Energy Inc. (NYSE:CVE) has several new projects coming online over the next couple of years, including the Narrows Lake project, the West White Rose offshore facilities, and the Foster Creek optimization project. Hence, the company has projected a production guidance range of 108,000 to 145,000 boed for 2025, representing approximately 3% growth relative to 2024.
L1 Capital stated the following about Cenovus Energy Inc. (NYSE:CVE) in its Q3 2024 investor letter:
“Cenovus Energy Inc. (NYSE:CVE) (Long -15%) and MEG Energy (Long -13%) shares fell as the WTI oil price decreased 17% to ~US$69/bbl on the back of increased concerns around a potential increase in OPEC supply along with slower global economic growth. Despite OPEC delaying a previously planned increase in oil output, the oil price continued to weaken due to the weaker demand outlook. During the quarter, we attended the Peters & Co oil and gas conference in Toronto, meeting one-on-one with management from Cenovus and MEG Energy, along with the entire peer group. We continue to favor Cenovus and MEG in the sector due to their strong cash flow generation, the long-life nature of their oil sands assets, low cost of production and strong balance sheets. Both Cenovus and MEG have now transitioned to returning 100% of free cash flow back to shareholders, having reached their respective net debt targets. As a result, we see both names offering sector leading shareholder returns, combined with some modest, accretive output growth.”
Overall, CVE ranks 11th on our list of billionaire’s favorite oil and gas stocks right now. While we acknowledge the potential for CVE to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
