Cenovus Energy Inc (USA) (CVE), Seadrill Ltd (SDRL): Why You Should Invest in These 3 Oil Companies

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Per an Energy Information Administration report, it is expected that oil production in the current year will be around 89.89 million barrels per day (bbl/d), while the global consumption of oil will reach 90.03 million bbl/d. Furthermore, production will surge to 91.22 million bbl/d, to match the consumption of 91.40 million bbl/d in 2014.

Cenovus Energy Inc (USA) (NYSE:CVE)

Looking at the dynamics of production and the estimated consumption of oil, the companies producing oil and gas should benefit.  Lets take a look at three oil and gas companies that could really outperform the market.

New contracts

Seadrill Ltd (NYSE:SDRL) recently won new contracts for drilling and oil exploration. The company received a 3 year contract from Bluewater in April 2013 for ultra-deep water drilling at West Neptune in South Korea.  The site is under construction and is expected to be ready by the second quarter of 2014. With a per day rate of drilling at $570,000, the company will earn revenue of around $662 million, and the contract can be extended for 1 year.

Seadrill Ltd (NYSE:SDRL) also extended its contract with Vietsovpetro for two jack-up rigs in West-Ariel and West Prospero in Vietnam for eight months at a day rate of $162,000.  That’s a sizable sum and should go a long way to ensuring its profitability.

In the first quarter of 2013, Seadrill Ltd (NYSE:SDRL)’s net operating income was $552 million and revenue was $1.3 billion.  In fact, it was the finest quarter ever for the company in terms of net operating income. It showed year over year growth of around 21% in net operating income and 18% in revenue.

The company optimally maximized its floater utilization to 92%, from 86% in the same period last year. Moreover, its jack-ups also performed well, with increased utilization of 99%, a 7% sequential increase.

Oil-rich resource

Cenovus Energy Inc (USA) (NYSE:CVE) recently sold its oil assets in Shaunavon for $236 million to Surge Energy. These assets were producing 3,600 bbl/d for Cenovus Energy Inc (USA) (NYSE:CVE). The company is eyeing its future growth in Alberta oil sands. Oil production from Alberta and nearby regions is expected to be around 125,000 bbl/d by 2016, from 70,000 currently. Moreover, the company has another 4 oil producing projects in Christina Lake, Foster Lake, Weyburn, and Pelican Lake.

The company increased its oil production outlook from 235,000 bbl/d to around 280,000 bbl/d for the current fiscal year, due to increased oil production capacity at Foster Creek. Each phase of Foster Creek, namely, F, G, and H is expected to produce around 35,000 bbl/d, individually, which is an increase of 5,000 bbl/d from its earlier estimation. The company has also reduced its oil production time line for this region.

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