Gibson Energy (TSE:GEI) Boosts Storage Capacity in Deal with Cenovus Energy
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Gibson Energy (TSE:GEI) Boosts Storage Capacity in Deal with Cenovus Energy

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Gibson Energy just inked a 15-year storage capacity deal with Cenovus Energy, which can help boost Gibson’s revenues and cash flows.

Gibson Energy (TSE:GEI), which specializes in the storage, optimization, processing, and collection of liquids and refined products, has approved the construction of two additional storage tanks at its Edmonton Terminal. This move is part of a 15-year “take-or-pay” contractual agreement with Cenovus Energy (TSE:CVE) (NYSE:CVE), meaning that Cenovus has to either take the product (storage space) from Gibson or pay a fee, ensuring stable revenue for Gibson regardless of whether Cenovus uses the full capacity. The new tanks will boost GEI’s storage capacity by 870,000 barrels.

Gibson’s CEO, Steve Spaulding, noted that this agreement will increase the company’s “high-quality, long-term infrastructure revenues and drive continued distributable cash flow per share growth.”

Gibson Energy Increases Capital Expenditure Guidance amid New Deal

As a result of the deal and various smaller-scale growth initiatives GEI is working on, the firm increased its 2023 growth capital expenditure forecast to come in at as much as C$150 million. Most of the projects contributing to this projection have already received approval.

Is Gibson Energy Stock a Buy, According to Analysts?

According to analysts, GEI stock comes in as a Hold based on two Buys, four Holds, and one Sell rating assigned in the past three months. The average Gibson Energy stock price target of C$26.88 implies 25.4% upside potential.

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