Cenovus Energy's (CVE) addition of MEG Energy's Christina Lake asset to its portfolio late last year has created a huge in-situ oil sands complex which should yield synergistic development opportunities for decades to come, RBC Capital Markets said in a Tuesday note.

The company remains on-track for at least $400 million in synergies in 2027 to 2028 and has further affirmed its plans to increase Christina Lake North production capacity to 150,000 barrels per day by 2028 from 110,000 bbl/d, RBC noted.

The company's "solid" Q1 results from its US refining business is expected to extend into Q2, with all of Canovus Energy's facilities running well with an optimized product slate toward distillates, including jet fuel, according to the note.

Cenovus Energy has emphasized that it has no near-term plans to increase its capital investment of $5 billion to $5.3 billion this year, RBC said, adding that $5 billion to $5.5 billion of spending is a good starting point for 2027.

RBC further estimated the company's free cash flow at about $9.5 billion in 2026 under its base outlook of $84 West Texas Intermediate and $37 New York Harbor and $11.2 billion under prices of $88 West Texas Intermediate and $44 New York Harbor.

RBC raised its price target to 47 Canadian dollars ($34.14) from CA$45 and maintained its outperform rating on the company's stock.

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