CVE:CC - Gibson Energy OK's two new oil storage tanks sparking analyst upgrades

2023-05-17 12:28:10 ET

Gibson Energy ( OTCPK:GBNXF ) +2.4% in Wednesday's trading after saying it will build two new oil storage tanks at its Edmonton terminal in Alberta, underpinned by a 15-year take-or-pay fee-based contract with Cenovus Energy ( CVE ).

The project will include the construction of two 435K-barrel tanks and significant supporting infrastructure at the terminal, which are expected to be placed into service in late 2024.

With the added capacity, the company raised its FY 2023 growth capital spending to as much as C$150M from C$100M-C$120M previously.

Stifel upgraded the stock to Buy from Hold with a C$26 price target following Gibson's ( OTCPK:GBNXF ) move, which "sends an important signal to the market on a stronger than expected growth opportunity set, and we believe it could potentially sanction another two tanks."

Credit Suisse raised the stock to Outperform from Neutral with a C$25.50 PT, citing impressive Q1 results and potential growth projects later in the year.

The additional tanks will increase Gibson's ( OTCPK:GBNXF ) longer-term infrastructure revenue and drive growth in distributable cash flow per share, President and CEO Steve Spaulding said.

More on Gibson Energy:

Financial and valuation comparison to sector peers

• Analysis: Gibson Energy: Trading At Just 9x Distributable Cash Flow, Offering A 7% Yield
• Stock price return: Down 4% YTD, down 17% in the past 12 months

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