On Sunday, April 2, 2023, OPEC+ shocked the market with a surprise oil supply cut. This hurts the U.S. the most. The Federal Reserve may only raise interest rates to slow the economy and weaken energy demand. More recently, the Fed enacted a quantitative easing-styled policy to support regional banks.
Investors who have no exposure to energy failed to hold their positions. Companies like Cenovus Energy (CVE) soared to over $19 on April 3, only to close at $17.54 on April 14. Suncor (SU) bounced back slightly. Even Shell (SHEL), which has green-friendly business objectives, held its rally.
Investors should consider honing in on Cenovus. This oil sands energy firm is lagging behind the market for no reason. The company cut its debt to around $4 billion. Although its debt reduction slowed when oil prices weakened late last year, 2023 is an opportunity.
CVE will expand its free cash flow to at least $7.5 billion when WTI crude prices rise. At $100 per barrel, CVE will have so much cash flow that it may meet its debt reduction target earlier.
Your Takeaway
Investors who want exposure to bigger mega-cap energy firms should watch Exxon (XOM), ConocoPhillips (COP), and Chevron (CVX). All three firms have a disciplined growth strategy and strong prospects.