- The fate of West White Rose was cast into doubt in March 2020 when Husky Energy Inc., the project's main proponent, halted work.
- Cenovus Energy Inc. (TSX: CVE) announced on early Tuesday morning that it has decided to resume the West White Rose offshore oil project.
- Cenovus said in September 2021 that it was "evaluating its options" for West White Rose alongside Suncor Energy Inc.
Cenovus Energy Inc. (TSX: CVE) announced on early Tuesday morning that it has decided to resume the West White Rose offshore oil project off the coast of Newfoundland and Labrador with its partners.
The platform is expected to produce oil by the end of the second quarter of 2026, with peak production of over 80,000 barrels per day (bbls/d) by year-end 2029.
The fate of West White Rose was cast into doubt in March 2020 when Husky Energy Inc., the project's main proponent, halted work owing to COVID-19. Husky later said in September that it was initiating a complete evaluation of the offshore project's scope, timeline, and cost.
When Cenovus bought Husky last year, it took over Husky's share in the project. Cenovus said in September 2021 that it was "evaluating its options" for West White Rose alongside Suncor Energy Inc. and other oil and gas companies.
In an official statement, Cenovus' President and Chief Executive Officer (CEO) Alex Pourbaix said that over the last 16 months, the partners worked together to de-risk the West White Rose, and they believe that the project is a better investment for shareholders.
What's next for Cenovus (TSX:CVE) stock?
At market open on Tuesday, the CVE stock gained 0.7 per cent at 9:45 AM EST, and it was trading at C$ 29.99 per share. Investors seem to be responding positively to the news of plans to restart the West White Rose oil project.
Notably, while announcing the results for the first quarter of this year, Cenovus said its Board of Directors approved tripling the base dividend starting with Q2 2022.
The company's total upstream production was approximately 800,000 barrels of oil equivalent per day (boe/d) in the first quarter of this year. Meanwhile, the net earnings jumped 639% year-over-year (YoY) to C$ 1,625 million.
Cenovus' decision to recommence follows a restructuring of its working interests in the West White Rose project and Terra Nova fields in September. The restructuring is believed to have improved strategic alignment across the two properties.
As the stock market is volatile, we cannot say that Cenovus will become the next Suncor. However, it is worth noting that the CVE stock's growth was more than double the growth of the SU stock over the last 12 months.
As per Refinitiv data, the CVE stock soared 196 per cent in the last 12 months, and the SU stock only grew 88 per cent in comparison.
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