5 Best Gas Stocks To Buy Right Now

The biggest financial threat that most investors face is the effect of inflation on purchasing power. Yet lately, most signs of inflation have just about disappeared. Is the threat of inflation finally behind us, or are investors ignoring inflation to their peril at the worst possible moment?

Why inflation matters
Millions of conservative investors happily put their money in low-yielding bank accounts and fixed-income securities, secure in the belief that they're investing safely. Yet the apparent stability in the nominal value of their investments hides the fact that their money won't be able to buy nearly as much in goods and services in the future as it did in the past.

In recent years, though, investors have discounted the potential impact of inflation on their portfolios. Consider these facts:

Gold is the traditional safe-haven investment for those who believe that inflation will take away the purchasing power of paper currency. Yet the plunge in gold prices has led to a mass exodus of investor interest in gold, with the popular SPDR Gold Trust (NYSEMKT: GLD  ) losing billions of dollars not just due to price declines but also as investors have taken money out of the ETF entirely. Inflation-indexed bonds like the Treasury's TIPS have climbed so far in price that their real inflation-adjusted yields are negative, even for bonds that don't mature for another 20 years. That's been excellent news for existing investors in iShares Barclays TIPS Bond (NYSEMKT: TIP  ) and similar inflation-indexed bond investments, but it presents no inflation protection for those considering purchases now. The sole fly in the inflation ointment has come from energy prices, with gasoline and heating-oil prices having remained stubbornly high despite plentiful domestic production from unconventional plays as refiners Phillips 66 (NYSE: PSX  ) , Valero (NYSE: VLO  ) , and others have greatly boosted their exports of refined products rather than letting Americans reap the benefits of high supply. Yet even the oil market has seen international spreads narrow, and gasoline prices have finally started to come down modestly, providing further downward pressure on inflation.

Based on the conventional understanding of inflation, you'd think that all these signs of its demise were a good thing. The truth is far less clear.

Top Freight Companies To Buy Right Now: Emerald Oil Inc (EOX)

Emerald Oil, Inc. (Emerald) incorporated on May 31, 2011, is an independent oil and natural gas exploration and production company. The Company focuses on developing oil wells in the Williston Basin of North Dakota and Montana primarily targeting the Bakken and three forks shale oil formations. Emerald controls approximately 35,000 net acres in the Williston Basin. In February 2014, Emerald Oil Inc acquired core Bakken and Three Forks producing properties and undeveloped leasehold in McKenzie and Williams Counties, North Dakota.

Emerald holds positions in the Rocky Mountain oil and natural gas plays. It has approximately 14,500 net acres in the Sand Wash Basin in northwest Colorado prospective for oil in the Niobrara formation. It has approximately 33,500 net acres in central Montana prospective for oil in the Heath formation. The Company also has approximately 72,800 net acres in the Tiger Ridge Field located in Blaine, Hill, and Chouteau Counties, Montana, prospective for natural gas, and another approximate 1,700 net acres in the Denver-Julesburg (DJ) Basin in Weld County, Colorado, prospective for oil in the Niobrara formation.

Advisors' Opinion:

• [By Monica Gerson]

  Emerald Oil (NYSE: EOX) is projected to post a Q4 loss at $0.02 per share on revenue of $18.04 million.

  Callon Petroleum Company (NYSE: CPE) is estimated to post its Q4 earnings at $0.00 per share on revenue of $26.83 million.

• [By John Udovich]

  Small cap Triangle Petroleum Corporation (NYSEMKT: TPLM), just like its peers Emerald Oil Inc (NYSEMKT: EOX) and Kodiak Oil & Gas Corp (NYSE: KOG), is focused on the Williston Basin�� Bakken and Three Forks formations and the company is scheduled to release second quarter fiscal year 2014 financial results after the close of trading�next Monday.�And the last time earnings were reported, shares jumped around 10% plus management gave some rosy commentary for investors. With that in mind, should investors in Triangle Petroleum Corporation be ready for another earnings report that excites the bulls?

5 Best Gas Stocks To Buy Right Now: Royal Dutch Shell PLC (RDS.B)

Royal Dutch Shell plc (Shell), incorporated on February 5, 2002, is an independent oil and gas company. The Company owns, directly or indirectly, investments in the numerous companies constituting Shell. Shell is engaged worldwide in the principal aspects of the oil and gas industry and also has interests in chemicals and other energy-related businesses. The Company operates in three segments: Upstream, Downstream and Corporate. Upstream combines the operating segments Upstream International and Upstream Americas, which are engaged in searching for and recovering crude oil and natural gas; the liquefaction and transportation of gas; the extraction of bitumen from oil sands that is converted into synthetic crude oil, and wind energy. Downstream is engaged in manufacturing; distribution and marketing activities for oil products and chemicals, in alternative energy (excluding wind), and carbon dioxide (CO2) management. Corporate represents the key support functions, comprising holdings and treasury, headquarters, central functions and Shell�� self-insurance activities. In October 2011, the Company bought a marine terminal on Canada's Pacific Coast as a possible site for a liquefied natural gas export terminal. In January 2012, the Company's 50% owned, Australia Arrow Energy Holdings Pty Ltd acquired all of the shares in Bow Energy Ltd. In January 2014, Royal Dutch Shell plc completed the acquisition of Repsol S.A.'s liquefied natural gas (LNG) portfolio outside North America.

Upstream International manages the Upstream businesses outside the Americas. It searches for and recovers crude oil and natural gas, liquefies and transports gas, and operates the upstream and midstream infrastructure necessary to deliver oil and gas to market. Upstream International also manages Shell�� entire liquefied petroleum gas (LNG) business, gas to liquids (GTL) and the wind business in Europe. Its activities are organized primarily within geographical units, although there are some activities that are mana! ged across the businesses or provided through support units.

Upstream Americas manages the Upstream businesses in North and South America. It searches for and recovers crude oil and natural gas, transports gas and operates the upstream and midstream infrastructure necessary to deliver oil and gas to market. Upstream Americas also extracts bitumen from oil sands that is converted into synthetic crude oil. Additionally, it manages the United States-based wind business. It comprises operations organized into business-wide managed activities and supporting activities.

Downstream manages Shell�� manufacturing, distribution and marketing activities for oil products and chemicals. These activities are organized into globally managed classes of business, although some are managed regionally or provided through support units. Manufacturing and supply includes refining, supply and shipping of crude oil. Marketing sells a range of products including fuels, lubricants, bitumen and liquefied petroleum gas (LPG) for home, transport and industrial use. Chemicals produces and markets petrochemicals for industrial customers, including the raw materials for plastics, coatings and detergents. Downstream also trades Shell�� flow of hydrocarbons and other energy-related products, supplies the Downstream businesses, markets gas and power and provides shipping services. Downstream additionally oversees Shell�� interests in alternative energy (including biofuels, and excluding wind) and CO2 management.

Projects and Technology manages the delivery of Shell�� major projects and drives the research and innovation to create technology solutions. It provides technical services and technology capability covering both Upstream and Downstream activities. It is also responsible for providing functional leadership across Shell in the areas of health, safety and environment, and contracting and procurement.

Advisors' Opinion:

• [By Vinay Singh]

  Natural gas isn't as cheap as it was a year ago and that's leading to big changes in the energy market. That will be a good thing for Ultra Petroleum (UPL), Royal Dutch Shell (RDS.B) and Alliance Natural Resource Partners (ARLP).

5 Best Gas Stocks To Buy Right Now: Murphy Oil Corp (MUR)

Murphy Oil Corporation, incorporated on June 29, 1964, is a worldwide oil and gas exploration and production company with retail and wholesale gasoline marketing operations in the United States and refining and marketing operations in the United Kingdom. In August 2013, the Company announced that it has completed the spin-off of its United States retail marketing business into an independent public company called Murphy USA Inc.

Murphy's exploration and production activities are subdivided into five geographic segments, including the United States, Canada, Malaysia, the Republic of the Congo and all other countries. Murphy's refining and marketing activities are subdivided into segments for the United States and the United Kingdom.

Exploration and Production

During the year ended December 31, 2012, Murphy's principal exploration and production activities were conducted in the United States by wholly owned Murphy Exploration & Production Company - USA (Murphy Expro USA), in Malaysia, Republic of the Congo, Indonesia, Suriname, Australia, Brunei, the Kurdistan region of Iraq, Cameroon, Vietnam and Equatorial Guinea by wholly owned Murphy Exploration & Production Company - International (Murphy Expro International) and its subsidiaries, in Western Canada and offshore Eastern Canada by wholly owned Murphy Oil Company Ltd. (MOCL) and its subsidiaries, and in the U.K. North Sea and the Atlantic Margin by wholly owned Murphy Petroleum Limited.

Murphy's crude oil and natural gas liquids production in 2012 was in the United States, Canada, Malaysia, the Republic of the Congo and the United Kingdom; its natural gas was produced and sold in the United States, Canada, Malaysia and the United Kingdom. MOCL owns a 5% undivided interest in Syncrude Canada Ltd. in northern Alberta, one of the producers of synthetic crude oil. Murphy's worldwide crude oil, condensate and natural gas liquids production in 2012, averaged 112,591 barrels per day. The Company's worldwi! de sales volume of natural gas averaged 490 million cubic feet per day in 2012.

In the United States, Murphy primarily has production of oil and/or natural gas from fields in the deepwater Gulf of Mexico, in the Eagle Ford Shale area of South Texas and onshore in South Louisiana. The Company produced approximately 26,100 barrels of oil per day and 53 million cubic feet of natural gas per day in the U.S. in 2012. During 2012, approximately 54% of total U.S. hydrocarbon production was produced at fields in the Gulf of Mexico. The Company holds a 60% interest at Medusa in Mississippi Canyon Blocks 538/582, which produced total daily oil and natural gas of about 4,300 barrels and for million cubic feet, respectively, in 2012. At December 31, 2012, the Medusa field had total proved oil and natural gas reserves of approximately 9.2 million barrels and 9.4 billion cubic feet, respectively. Murphy has a 62.5% working interest in the Front Runner field in Green Canyon Blocks 338/339. Oil and natural gas production at Front Runner averaged about 3,900 barrels of oil per day and four million cubic feet per day in 2012. The Company also acquired additional working interests in the Thunder Hawk field in Mississippi Canyon Block 734 in 2012 and holds 62.5% of this field. In 2012 oil production from this field averaged 2,800 barrels per day and 1.7 million cubic feet per day and 3.2 million cubic feet per day due to a new well completed in 2012.

The Company is primarily concentrating drilling efforts in the areas of the Eagle Ford where oil is the primary hydrocarbon produced. Totals for 2012 oil and natural gas production in the Eagle Ford area were approximately 13,300 barrels per day and 13 MMCF per day, respectively. On a barrel of oil equivalent basis, Eagle Ford production accounted for 44% of total U.S. production volumes in 2012. At December 31, 2012, the Company's proved reserves in the Eagle Ford Shale area totaled 113.6 million barrels of oil and 108.7 billion cubic feet of natural! gas. Tot! al proved U.S. oil and natural gas reserves at December 31, 2012 were 142.6 million barrels and 209.7 billion cubic feet, respectively. The Company is developing the Dalmatian field located in DeSoto Canyon Blocks 4 and 48 in the Gulf of Mexico.

In Canada, the Company owns an interest in three non-operated assets - the Hibernia and Terra Nova fields offshore Newfoundland in the Jeanne d'Arc Basin and Syncrude Canada Ltd. in northern Alberta. In addition, the Company owns interests in one heavy oil area, two natural gas areas and light oil prospective acreage in the Western Canadian Sedimentary Basin (WCSB). Murphy has a 6.5% working interest in Hibernia, while at Terra Nova the Company's working interest is 10.475%. Oil production in 2012 was about 5,300 barrels of oil per day at Hibernia and 1,700 barrels per day at Terra Nova. Total proved oil reserves at December 31, 2012 at Hibernia and Terra Nova were approximately 10.6 million barrels and 5.9 million barrels, respectively.

Murphy owns a 5% undivided interest in Syncrude Canada Ltd., a joint venture located about 25 miles north of Fort McMurray, Alberta. Syncrude utilizes its assets, which include three coking units, to extract bitumen from oil sand deposits and to upgrade this bitumen into a synthetic crude oil. Production in 2012 was about 13,800 barrels of synthetic crude oil per day. Total proved reserves for Syncrude at year-end 2012 were 119.1 million barrels. Daily production in 2012 in the WCSB averaged about 7,500 barrels of mostly heavy oil and about 217 million cubic feet of natural gas. Through 2012, the Company has acquired approximately 144 thousand net acres of mineral rights in the Montney area, including Tupper and Tupper West.

In Malaysia, the Company has majority interests in six separate production sharing contracts (PSCs). The Company serves as the operator of all these areas other than the Kakap field. The production sharing contracts cover approximately 2.79 million gross acres. Murphy h! as an 85%! interest in discoveries made in two shallow-water blocks, SK 309 and SK 311, offshore Sarawak. About 7,400 barrels of oil per day were produced in 2012 at Blocks SK 309/311, with almost 75% of this at the West Patricia field and the remainder mostly associated with gas liquids produced at other Sarawak fields. Total net natural gas sales volume offshore Sarawak was about 174 million cubic feet per day during 2012 . Total proved reserves of oil and natural gas at December 31, 2012 for Blocks SK 309/311 were 10.3 million barrels and 284.7 billion cubic feet, respectively.

The Company made a discovery at the Kikeh field in deepwater Block K, offshore Sabah, Malaysia. Total gross acreage held by the Company in Block K as of December 31, 2012 was 80,000 acres. Production volumes at Kikeh averaged 44,900 barrels of oil per day during 2012. Total proved reserves booked in Block K as of year-end 2012 were 85.4 million barrels of oil and 72.9 billion cubic feet of natural gas.Total proved reserves booked in Block K in 2012, were 85.4 million barrels of oil and 72.9 billion cubic feet of natural gas. Total gross acreage held by the Company at year-end 2012 in Block H was 1.40 million acres. Murphy has a 75% interest in gas holding agreements for Kenarong and Pertang discoveries made in Block PM 311, located offshore peninsular Malaysia.

The Company had interests in Production Sharing Agreements (PSA) covering two offshore blocks in Republic of the Congo - Mer Profonde Sud (MPS) and Mer Profonde Nord (MPN) during 2012. These interests covered approximately 1.33 million gross acres with water depths ranging from 490 to 6,900 feet, and the Company operated both blocks. Total oil production in 2012 averaged 2,100 barrels per day at Azurite for the Company's 50% interest. Anticipated production in 2013 is 1,500 barrels per day.

The Company holds six exploration permits in Australia and serves as operator of four of them. Block NT/P80 in the Bonaparte Basin, offshore northwester! n Austral! ia, was acquired in June 2009 and covers approximately 1.20 million gross acres. In May 2012, Murphy was awarded permit WA-476-P in the Carnarvon Basin, offshore Western Australia. The Company holds 100% working interest in the permit which covers 177,000 gross acres. In August 2012, Murphy was awarded permit WA-481-P in the Perth Basin, offshore Western Australia. The permit covers approximately 4.30 million gross acres, with water depths ranging from 20 to 300 meters. The Company holds a 40% working interest. The work commitment calls for tw0- dimensional (2D) and three-dimensional (3D) seismic acquisition and processing, geophysical work and three exploration wells. In November 2012, Murphy acquired a 20% non-operated working interest in permit WA-408-P in the Browse Basin. This block is adjacent to AC/P36 and is in the midst of a two-well exploration campaign. The permit comprises approximately 417,000 gross acres.

The Company has interests in four exploration licenses in Indonesia and serves as operator of all these concessions. . Following contractually mandated acreage relinquishment in 2012, the block covers approximately 745 thousand gross acres. The Company has a 28.3% interest in the block which covers about 543 thousand gross acres after a required partial relinquishment of acreage during 2012. The permit calls for a 3D seismic program and three exploration wells. Murphy has a 100% interest in the block which covers 1.22 million gross acres. In November 2012, the Company signed a production sharing contract with Vietnam National Oil and Gas Group and PetroVietnam Exploration Production Company, whereby it acquired 65% interest and operatorship of Blocks 144 and 145. The blocks cover approximately 4.42 million gross acres and are located in the outer Phu Khanh Basin. In late 2012, the Company was granted Vietnam's government approval to acquire a 60% working interest and operatorship of Block 11-2/11.

The Company operates and holds a 50% interest in the block. The Ce! ntral Doh! uk block covers approximately 153 thousand gross acres and is located in the Dohuk area of the Kurdistan region in Iraq. The Company shot seismic in 2011 and drilled an unsuccessful exploration well in 2012.The Company acquired a 100% working interest and operatorship of Block 48 offshore Suriname. The block encompasses 794 thousand gross acres with water depths ranging from 1,000 to 3,000 meters. Murphy relinquished Block 37 in July 2012.

Murphy was granted government approval to acquire a 50% working interest and operatorship of the NTEM concession. The working interest was acquired from Sterling Cameroon Limited (Sterling) via a farm-out agreement of the existing production sharing contract. Sterling retained a 50% non-operated interest in the block. The NTEM block, situated in the Douala Basin offshore Cameroon, encompasses 573 thousand gross acres, with water depths ranging from 300 to 1,900 meters. In October 2012, Murphy signed an agreement with Perenco Cameroon to acquire a 50% interest in the Elombo production sharing contract, immediately adjacent to the NTEM concession. The Company received government approval to acquire the acreage in December 2012. Perenco retained a 50% operating interest in the block. The Elombo block, situated in the Douala Basin offshore Cameroon, between the shoreline and the NTEM block, encompasses 594 thousand gross acres with water depths ranging up to 1,100 meters.

In December 2012, Murphy signed a production sharing contract for block W offshore Equatorial Guinea. Murphy has a 45% working interest and has been designated the operator. The government is expected to ratify the contract early in 2013. The block is located offshore mainland Equatorial Guinea and encompasses 557 thousand gross acres with water depths ranging from 60 to 2,000 meters. The initial exploration period of five years is divided into two sub-periods, a sub-period of three years and a second sub-period of two years. The sub-period may be extended one year and with this! extensio! n is the obligation to drill one well. Murphy has produced oil and natural gas in the United Kingdom sector of the North Sea for many years. In 2012, Murphy entered into several contracts to sell all of its oil and gas properties in the United Kingdom.

Murphy's total proved undeveloped reserves at December 31, 2012 increased 42.0 million barrels of oil equivalent (MMBOE) from a year earlier. Approximately 44.0 MMBOE of proved undeveloped reserves were converted to proved developed reserves during 2012. During 2012, there were 26.6 million barrels of oil per day of positive revisions for proved undeveloped reserves. At December 31, 2012, proved reserves are included for several development projects that are ongoing, including natural gas developments at the Tupper West area in British Columbia and offshore Sarawak Malaysia, and an oil development at Kakap, offshore Sabah Malaysia. Total proved undeveloped reserves associated with various development projects at December 31, 2012 were approximately 219 million barrels of oil per day, which is 36% of the Company's total proved reserves.

Murphy Oil USA, Inc. (MOUSA), a wholly owned subsidiary of Murphy Oil Corporation and markets its refined products through a network of Company stations, unbranded wholesale customers and bulk products customers in a 30-state area, primarily in the Southern and Midwestern United States. Murphy's Company stations are located in 23 states and are primarily located in the parking lots of Walmart Supercenters using the brand name Murphy USA. The Company stations also include stand-alone locations using the Murphy Express brand. During 2012, Company stations sold over 3.8 billion gallons of motor fuel. At December 31, 2012, the Company marketed fuel and convenience merchandise through 1,165 Company stations. Of these Company stations, 1,015 are located on parking lots of Walmart Supercenters or other Walmart stores and 150 are stand-alone Murphy Express locations.

The Company owns land und! erlying 9! 08 of the Company stations on Walmart parking lots. No rent is payable to Walmart for the owned locations. For the remaining 104 Company stations located on Walmart property that are not owned, Murphy has master agreements that allow the Company to rent land from Walmart. The master agreements contain general terms applicable to all rental sites on Walmart property in the United States. In addition to the motor fuel sold at the Company's Company stations, its stores carry a broad selection of snacks, beverages, tobacco products, and other non-food merchandise. The Company's merchandise offerings include two private label products, an isotonic drink offered in several flavors and a private label energy drink. In 2012, the Company purchased more than 88% of its merchandise from a single vendor, McLane's Company, Inc., a wholly owned subsidiary of Berkshire Hathaway, Inc.

Murphy owns an interest in a crude oil pipeline that connects storage at the Louisiana Offshore Oil Port (LOOP) at Clovelly, Louisiana, to the formerly owned Meraux refinery. Murphy owns a 40.1% interest in its 22 miles of this pipeline from Clovelly to Alliance, Louisiana, and 100% of the remaining 24 miles from Alliance to Meraux. Murco Petroleum Limited (Murco), a wholly owned U.K. subsidiary, owns 100% interest in a refinery at Milford Haven, Pembrokeshire, Wales. The refinery is located on a 938 acre site owned by the Company; 430 acres are used by the refinery and the remainder is rented for agricultural use. The refinery consistently performed near nameplate capacity during 2012. Murphy has announced its intention to sell the Milford Haven refinery and United Kingdom marketing assets.

Advisors' Opinion:

• [By Rich Smith]

  Sometime in the second half of this year, Murphy Oil� (NYSE: MUR  ) will split in two. When that happens, the company announced today, its current president and CEO, Steve Cosse, will be leaving Murphy proper to join the spun-off business running the firm's current downstream operations, Murphy USA.

• [By The Value Investor]

  Shareholders in Murphy Oil (MUR) have to check their broker statements today. After the spin-off of its former retail marketing business is complete, shareholders now hold shares in both the former Murphy Oil as well as in the newly formed Murphy USA.

• [By Ben Levisohn]

  The shares will likely react more to the fleet status report that was released last night, which saw the newbuild Ocean BlackRhino secure a contract, but only because it will take over the contract that the Ocean Confidence was set to begin in April 2015. The transfer of this backlog suggests that the BlackRhino could not secure its own contract that commenced in its delivery window. The customer (Murphy Oil (MUR)) has the option to extend the original 285-day contract at $550k/d to a 2-year contract at $500k/d, or a 3-year contract at $485k/d. The 485k/d rate represents the step down from recent 3-year contracts in the $550-$600 range. While the rate is above initial speculation of a flat $400k/d rate and our estimate of $450k/d, we think it will be perceived negatively as it serves as a reminder that the trend in ultra-deepwater dayrates remains firmly down. Several positive datapoints recently had seemed to instill a sense of complacency in the market that this contract will likely help dispel.

5 Best Gas Stocks To Buy Right Now: Cenovus Energy Inc (CVE)

Cenovus Energy, Inc. (Cenovus), incorporated on January 1, 2011, is a Canadian integrated oil company. The Company�� operations include oil sands projects in northern Alberta, which use specialized methods to drill and pump the oil to the surface. It also has natural gas and oil production in Alberta and Saskatchewan. It operates in four segments: oil sands, conventional, refining and marketing, and corporate and eliminations. The Company has 50% ownership with Phillips 66 in two United States refineries, which includes Wood River (Illinois) and Borger (Texas) refineries. It has two producing steam-assisted gravity drainage (SAGD) projects in the oil sands-Foster Creek and Christina Lake, as well as several emerging projects which are in various stages of development. Foster Creek and Christina Lake are 50%-owned by ConocoPhillips. It also produces heavy oil from the mobile Wabiskaw formation at its 100%-owned Pelican Lake operation in the Greater Pelican Region, about 300 kilometers north of Edmonton.

Its reserves and production are located in Canada, primarily within the provinces of Alberta and Saskatchewan. As of December 31, 2012, it had a land base of approximately seven million net acres and Company Interest Before Royalties proved reserves of approximately 1,717 million barrels of bitumen, 184 million barrels of heavy crude oil, 115 million barrels of light and medium crude oil and NGLs and 955 billion cubic feet of natural gas. It also had Company Interest Before Royalties probable reserves of approximately 676 million barrels of bitumen, 105 million barrels of heavy crude oil, 56 million barrels of light and medium crude oil and natural gas liquefied (NGLs) and 338 billion cubic feet of natural gas as of December 31, 2012.

Oil Sands

The Oil sands segment includes the development and production of Cenovus�� bitumen assets at Foster Creek, Christina Lake and Narrows Lake, as well as heavy oil assets at Pelican Lake. This segment also includes the Atha! basca natural gas assets and projects in the early stages of development, such as Grand Rapids and Telephone Lake. Certain of the Company�� operated oil sands properties, notably Foster Creek, Christina Lake and Narrows Lake, are jointly owned with ConocoPhillips. As of December 31, 2012, it had bitumen rights of approximately 1,469,000 gross acres (1,097,000 net acres) within the Athabasca and Cold Lake areas, as well as the exclusive rights to lease an additional 478,000 net acres areas on the Cold Lake Air Weapons Range on its behalf and/or its assignee�� behalf.

As of December 31, 2012, there were 56 wells producing. It operates an 80 megawatt natural gas-fired cogeneration facility in conjunction with the SAGD operation at Foster Creek. The steam and power generated by the facility is presently being used within the SAGD operation and the excess power generated is being sold into the Alberta Power Pool. It has 50% interest in Christina Lake, an oil sands property in northeast Alberta that uses SAGD technology and produces from the McMurray formation. During 2011, the Company drilled three wells at Christina Lake using its Wedge WellTM technology. As of December 31, 2012, there were six producing wells.

The Company holds 50% interest in Narrows Lake, an oil sands property within the Christina Lake Region in northeast Alberta. The project includes gross production capacity of 130,000 barrels per day (bbls/d) of bitumen to be developed in up to three phases, with the first phase expected to have production capacity of approximately 45,000 barrels per day of bitumen. Using a pattern, horizontal well polymer flood, it produces heavy crude oil from the Cretaceous Wabiskaw formation at its Pelican Lake property, which is located within the Greater Pelican Region in northeast Alberta. During 2012, it drilled 76 heavy oil wells. The Company holds a 38% non-operated interest in 110 kilometers, 20-inch diameter crude oil pipeline, which connects the Pelican Lake area to a pipelin! e that tr! ansports crude oil from northern Alberta to crude oil markets.

The Company�� new resource play assets include oil sands properties. Its Grand Rapids property is located in the Greater Pelican Region in northeast Alberta, where deposits of bitumen have been identified in the Cretaceous Grand Rapids formation. Its Telephone Lake property is located in the Borealis Region in northeast Alberta. The Steepbank and East McMurray properties are also located in the Borealis Region, southwest of Telephone Lake. It produces natural gas from the Cold Lake Air Weapons Range and several surrounding landholdings located in northeast Alberta and hold surface access and natural gas rights for exploration, development and transportation from areas. The majority of its natural gas production in the area is processed through wholly owned and operated compression facilities.

Conventional

Conventional segment includes the development and production of conventional crude oil, NGLs and natural gas in Alberta and Saskatchewan. It includes the carbon dioxide enhanced oil recovery project at Weyburn and emerging tight oil opportunities. As of December 31, 2012, it had an established land position of approximately 4.9 million gross acres, of which approximately 3.2 million gross acres are developed. The mineral rights on approximately 59% of its net landholdings are owned in fee title by Cenovus. It leases Crown lands in some areas in Alberta, mainly in the Early Cretaceous geological formations, primarily in the Suffield and Wainwright areas.

The Company holds interests in multiple zones in the Suffield, Brooks North, Langevin, Drumheller, and Wainwright areas in southern Alberta with a mix of medium and heavy crude oil production. Development in these areas focuses on infill drilling, optimization of existing wells and other specialized oil recovery methods. It operates water handling facilities to manage oil production. In the unitized portion of the Weyburn crude oil field ! in southe! ast Saskatchewan, it has 62% working interest. The Weyburn unit produces light and medium sour crude oil from the Mississippian Midale formation and covers 78 sections of land. As of December 31, 2012, approximately 90% of the approved CO2 flood pattern development at the Weyburn unit was completed. It holds interests in multiple zones in the Suffield, Brooks North, Langevin and Drumheller areas in southern Alberta.

Refining and Marketing

Refining and marketing segment is focused on the refining of crude oil products into petroleum and chemical products at two refineries located in the United States. The refineries are jointly owned with and operated by Phillips 66. This segment also markets Cenovus�� crude oil and natural gas, as well as third-party purchases and sales of product that provide operational flexibility for transportation commitments, product type, delivery points and customer diversification.

Through WRB Refining LP (WRB), the Company has 50% ownership interest in both the Wood River and Borger Refineries located in Roxana, Illinois and Borger, Texas respectively. ConocoPhillips is the operator and manager of WRB. As of December 31, 2012, the Wood River refinery had a processing capacity of approximately 306,000 barrels per day of crude oil, including approximately 110,000 barrels per day of heavy crude oil. It processes light low-sulphur and heavy high-sulphur crude oil that it receives from North American crude oil pipelines to produce gasoline, diesel and jet fuel, petrochemical feedstocks and asphalt. As December 31, 2012, the Borger Refinery had a processing capacity of approximately 146,000 barrels per day of crude oil, including approximately 35,000 barrels per day of heavy crude oil, and approximately 45,000 barrels per day of NGLs. It processes crude oil and NGLs that it receives from North American pipeline systems to produce gasoline, diesel and jet fuel along with NGLs and solvents.

The Company's Marketing group is focused ! on enhanc! ing the netback price of its production. It manages the transportation and marketing of crude oil for its upstream operations. It also manages the marketing of its natural gas, which is primarily sold to industrials, other producers and energy marketing companies.

Corporate and Eliminations

The segment includes inter-segment eliminations that relate to transactions that have been recorded at transfer prices based on current market prices, as well as unrealized intersegment profits in inventory. The Corporate and Eliminations segment also includes Cenovus costs for general and administrative and financing activities.

Advisors' Opinion:

• [By Robert Rapier]

  Whether KXL is approved is unlikely to have a big impact on any particular company. TransCanada would probably see the most significant share price movement, but the project isn�� a make-or-break for the company. Oil sands producers like Cenovus Energy (NYSE: CVE, TSE: CVE) have signed up to ship on KXL, and could see some share price movement as well. KXL would probably be the low-cost shipping option for Cenovus and other oil sands producers, but during my visit to Fort McMurray in November Cenovus emphasized that whether KXL is approved or not, the outcome would have no effect on its growth plans given the ready availability of alternatives.

• [By Arjun Sreekumar]

  Faced with growing uncertainty, some operators are even scaling back investments and reducing cash flow guidance. Talisman Energy (NYSE: TLM  ) , Canada's sixth-largest independent oil producer, cut its capital budget forecast for the year by 25%, while Cenovus Energy (NYSE: CVE  ) in December lowered its cash flow forecast for the year by 16% to as low as C$3.1 billion. And Canadian Natural Resources (NYSE: CNQ  ) said that it plans to reduce spending on thermal sands production.

• [By Tyler Crowe]

  If the "dirty" image of oil sands was the only problem, then perhaps a move similar to what Cenovus Energy (NYSE: CVE  ) has just made is the solution. Find out what that move is by tuning in to the video below.�