The door is closing on CVE.

We have alerted readers to CVE in earlier postings as to the potential for future profits from an investment in this Canadian oil company.  Unless you believe the world is going to give up using oil or that Obama will be made dictator CVE merits your consideration.  CVE is similar to another of our recommendations COSWF in that both have huge pools of oil from which to draw. CVE is different in that the company is only starting to tap their oil pools. Both are in Canada away from Obama's anti-business approach, but in a stable political environment. 

Cevonus Energy, symbol CVE, is a integrated young oil company. CVE uses state of the art steam assisted gravity drainage drilling to get at large pools of oil deep in the oil sands of Canada.  The company spun out of Suncor just over two years ago is slowly ramping up production and likely will not get to full production until 2021. However much of the big increases will occur between now and 2016.  In addition to the oil pools CVE also produces natural gas from it's areas of operation. Unlike the natural gas in the Bakken areas of North Dakota where much of the gas is considered nuisance to the oil delivery, the natural gas in Canada is being used there and eventually will be be shipped to Asia. CVE also has interests in two refineries based in the US. However the low price of natural gas has hurt the profits of CVE currently. 

Judging from what we read there should be an additional 75% increase in oil production from current levels going forward. That kind of increase means serious dividend increases and resulting capital gain in the stock price.  The current payout is 20 cents per quarter or around 2.4% so you are paid nicely to wait for the future payouts too.  Current per barrel costs of around $50 per barrel means CVE should be good for the long haul profit wise since most non-Opec oil producers can not produce for less than $50 as well. 

The reason for this posting is that we have seen two brokerages post opinions on CVE in recent days and We would expect many investors who do not know about CVE will not take a look at the potential in the stock and company.  Taking a position at the current price of around $33 plus would be fine for a longer term horizon, however if you are considering a shorter term trade under $30 would be preferable.  This would be a good selection for those looking to stuff something in their children's or grandchildren's stocking for the future. Note that dividend tax is paid in Canada prior to your payout and can be credited against your IRS filing in the US. 

We do not have a position either long or as an option in CVE, but are considering taking a long term derivative position here.