Andrew Bell

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The bold move by Cenovus CEO (CVE.TO) Brian Ferguson to double his oil production with the $17.7-billion acquisition of Canadian assets from ConocoPhillips (COP.N) is the type of story we live for on BNN. Stick with us all day all we explore the financial and political angles.

For one thing, yet another global oil company is cutting its exposure to the oil sands. Statoil walked away from the sector last year and Royal Dutch Shell is dumping near all of its oil sands assets.

Canada's bitumen “has been losing out to cheaper U.S. shale oil,” the Wall St Journal says. “Western Canadian heavy crude costs more to extract because it must be separated from deposits of sand and trades at a discount, in part because of the distance it must be transported from remote boreal forests in Alberta.”

Our lineup of guests today includes Ryan Bushell, portfolio manager at Leon Frazer & Associates, at 10:30 a.m. ET. And at 3:05 p.m. ET, our feature guest is the always entertainingly skeptical Tom Caldwell, chairman of Caldwell Securities. We’ll get his take on the international exodus from Alberta.

Cenovus shares have shed more than eight per cent in U.S. pre-market trading.

Raymond James, which rates the stock at Market Perform, has cut its target prices on the stock to $18 from $23. The shares closed at $17.45 in Toronto yesterday. 

"Cenovus goes from exhibiting one of the strongest balance sheets in the peer group, to one of the most levered,” analyst Chris Cox says. “We struggle with the decision to deploy capital toward this acquisition versus the alternative option of deploying cash on the balance sheet toward buybacks.”

BUSHELL’S TAKE

Our lineup of guests today includes Ryan Bushell, portfolio manager at Leon Frazer & Associates, at 10:30 a.m. ET.  

He tells segment producer Polina Chinkarenko that Cenovus is buying oil sands assets  at or near the bottom of the cycle in a ”counter-cyclical investment that will likely build long term value.”

As for oil majors abandoning Alberta bitumen, Bushell says “in the short term this is worrisome [but] the oil sands aren't going anywhere and the capital is spent. These companies now have far fewer competitors and lower costs. My guess is these asset purchases will look like steals in 10 years.”

And at 3:05 p.m. ET, our feature guest is the always entertainingly skeptical Tom Caldwell, chairman of Caldwell Securities. We’ll get his take on the international exodus from Alberta. 

LULU LOSSES

Lululemon (LULU.O) has plunged more than 19 per cent in the pre-market after the apparel seller warned of a drop in first quarter sales.

Wells Fargo cut the stock to Market Perform, warning that the top-line slowdown is being driven by online and store channels. Susquehanna Financial downgraded the athletic wear specialist to Neutral, warning that “a lot of questions need to be answered before we can gauge the viability of a sustainable recovery.”

We’ll talk to Lululemon CEO on BNN today - the plan is to have him join us this morning.

TD UNDER PRESSURE

Speaking of CEOs under pressure, BNN managing editor Noah Zivitz says Toronto-Dominion Bank (TD.TO) chief Bharat Masrani and his colleagues will almost certainly face questions at the bank's annual meeting today on anonymous claims of aggressive sales tactics. Paul Bagnell will report from the meeting.

DOLLARAMA-RAMA

Lululemon isn’t known for low prices (wouldn’t a torn old T-shirt and boxers be more in keeping with the non-materialist yoga ethos?) but business looks strong at dollar store empire Dollarama (DOL.TO)

Same-store sales rose almost six per cent in the latest quarter as more customers came through the door and they spent more.

Retail brand-refresher Joe Jackman, chief executive officer of Jackman Reinvents, joins us at 12:30 p.m. ET. He tells segment producers Michael Chu and Michelle Zadikian that the chain has re-shaped Canada's retail industry.

Every morning Commodities host Andrew Bell writes a ‘chase note’ to BNN's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnn.ca/subscribe.