Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) today announced its
financial and operating results for the third quarter of 2024. The
company generated nearly $2.5 billion in cash from operating
activities, $2.0 billion of adjusted funds flow and $614 million of
free funds flow in the quarter. Upstream production of more than
771,000 barrels of oil equivalent per day (BOE/d)1 was slightly
lower compared with the second quarter primarily because of
turnaround activity at the Christina Lake oil sands facility.
Turnaround impacts to production were lower than forecast, as
Christina Lake completed its turnaround ahead of schedule. In the
downstream, total throughput increased by about 20,000 barrels per
day (bbls/d) from the second quarter to almost 643,000 bbls/d, and
a major turnaround was successfully completed at the Lima Refinery.
“We are efficiently and effectively progressing our major
projects and our growth plan is on track to deliver increased
production that will enhance shareholder returns for the long
term,” said Jon McKenzie, Cenovus President & Chief Executive
Officer. “With planned upstream and downstream maintenance
activities behind us, we’re well positioned to deliver strong
operations for the balance of the year and into 2025.”
Recent highlights
- Returned $1.1 billion of cash to shareholders in the third
quarter, including $732 million in share purchases and base
dividends of $329 million.
- Completed the Christina Lake turnaround safely and well ahead
of schedule, resulting in production from the asset exceeding the
company’s forecast by 15,000 bbls/d to 20,000 bbls/d in the
quarter.
- Completed a major turnaround at the Lima Refinery on schedule,
with pipeline connections to the Toledo Refinery enabling Lima
crude runs to continue at a reduced rate, avoiding a full
shutdown.
- Began production from two new well pads at Sunrise which will
ramp up in the fourth quarter, which are part of the Sunrise growth
program.
- Completed the SeaRose floating production, storage and
offloading (FPSO) vessel asset life extension work with resumed
volumes around year end, achieving a critical milestone for the
West White Rose project.
- All major projects remain on track to deliver significant
growth with West White Rose, Foster Creek optimization, Sunrise
growth program and Narrows Lake pipeline progressing as
expected.
Third-quarter results
Financial summary
($ millions, except per share amounts) |
2024 Q3 |
2024 Q2 |
2023 Q3 |
Cash from (used in) operating activities |
2,474 |
2,807 |
2,738 |
Adjusted funds flow2 |
1,960 |
2,361 |
3,447 |
Per share (diluted)2 |
1.05 |
1.26 |
1.81 |
Capital investment |
1,346 |
1,155 |
1,025 |
Free funds flow2 |
614 |
1,206 |
2,422 |
Excess free funds flow2 |
146 |
735 |
1,989 |
Net earnings (loss) |
820 |
1,000 |
1,864 |
Per share (diluted) |
0.42 |
0.53 |
0.97 |
Long-term debt, including current portion |
7,199 |
7,275 |
7,224 |
Net debt |
4,196 |
4,258 |
5,976 |
Production and throughput
(before royalties, net to Cenovus) |
2024 Q3 |
2024 Q2 |
2023 Q3 |
Oil and NGLs (bbls/d)1 |
630,500 |
656,300 |
652,400 |
Conventional natural gas (MMcf/d) |
844.6 |
867.2 |
867.4 |
Total upstream production (BOE/d)1 |
771,300 |
800,800 |
797,000 |
Total downstream throughput (bbls/d) |
642,900 |
622,700 |
664,300 |
1 See Advisory for production by product type.2
Non-GAAP financial measure or contains a non-GAAP financial
measure. See Advisory.
Operating
results1
Cenovus’s total revenues were approximately $14.2 billion in the
third quarter, down from $14.9 billion in the prior quarter,
primarily due to lower commodity prices, which impacted both
upstream and downstream results. Planned turnaround activities
reduced production, primarily at the Christina Lake oil sands
facility and Rainbow Lake conventional operations, as well as in
the Atlantic region due to the SeaRose FPSO asset life extension,
and reduced throughput at the Lima Refinery.
Upstream revenues were about $7.3 billion, down from
$7.9 billion in the second quarter, while downstream revenues
were approximately $9.2 billion, up from $9.1 billion in the
prior quarter. Total operating margin3 was about $2.4 billion,
compared with $2.9 billion in the previous quarter. Upstream
operating margin4 was approximately $2.7 billion, down from $3.1
billion in the second quarter. The company had a downstream
operating margin4 shortfall of $323 million in the third quarter as
the Lima Refinery underwent a major planned turnaround, compared
with a shortfall of $153 million in the previous quarter. In
the third quarter, operating margin in U.S. Refining included
approximately $209 million of first in, first out (FIFO) losses and
about $100 million of turnaround expenses and improvement projects
executed during the Lima turnaround.
Total upstream production was 771,300 BOE/d in the third
quarter, a decrease of 29,500 BOE/d from the prior quarter due to
turnarounds at Christina Lake, Rainbow Lake and other Conventional
facilities. Christina Lake production was 211,800 bbls/d, compared
to 237,100 bbls/d in the second quarter, as a result of the planned
turnaround activity. Production impacted by the Christina Lake
turnaround was restored ahead of schedule. Foster Creek and Sunrise
production increased quarter-over-quarter, with 198,000 bbls/d at
Foster Creek compared with 195,000 bbls/d in the second quarter and
Sunrise production of 50,400 bbls/d compared with 46,100 bbls/d in
the second quarter. Production from the Lloydminster thermal and
Lloydminster conventional heavy assets was 109,400 bbls/d and
16,300 bbls/d respectively, both slightly below the prior
quarter.
Production in the Conventional segment was 118,100 BOE/d in the
third quarter, a slight decrease from 123,100 BOE/d in the second
quarter, as turnaround activities were safely completed at Rainbow
Lake and other Conventional facilities.
In the Offshore segment, production was 65,500 BOE/d compared
with 66,200 BOE/d in the second quarter. In Asia Pacific, sales
volumes were 56,500 BOE/d, slightly lower than the previous quarter
due to the completion of planned maintenance on the Liwan offshore
platform and at the onshore Gaolan gas plant. In the Atlantic,
production was 9,000 bbls/d, up from 8,400 bbls/d in the prior
quarter as the non-operated Terra Nova field continues to ramp up
to full rates. Planned maintenance work on the SeaRose FPSO was
completed at the dry dock in Belfast and the vessel is returning to
the White Rose field, with production expected to resume by year
end.
Refining throughput in the third quarter was 642,900 bbls/d, an
increase from 622,700 bbls/d in the second quarter, primarily due
to reduced maintenance activity. Crude throughput in Canadian
Refining was 99,400 bbls/d in the third quarter, compared with
53,800 bbls/d in the previous quarter, with the increase primarily
due to a major turnaround at the Lloydminster Upgrader which
impacted second quarter throughput.
In U.S. Refining, crude throughput was 543,500 bbls/d in the
third quarter, compared with 568,900 bbls/d in the second quarter.
Throughput decreased primarily due to a major turnaround at the
Lima Refinery that commenced in September, which resulted in the
plant running at reduced crude throughput rates. Market capture in
the U.S. was lower than the previous quarter primarily due to
inventory timing impacts, the Lima Refinery turnaround and
unplanned outages in secondary units at the operated and
non-operated refineries. Subsequent to the quarter, the turnaround
at Lima was safely and successfully completed in October.
3 Non-GAAP financial measure. Total operating
margin is the total of Upstream operating margin plus Downstream
operating margin. See Advisory.4 Specified financial measure. See
Advisory.
Financial results
Cash from operating activities in the third quarter, which
includes changes in non-cash working capital, was about $2.5
billion, compared with $2.8 billion in the second quarter. Adjusted
funds flow was approximately $2.0 billion, compared with $2.4
billion in the prior period and excess free funds flow (EFFF) was
$146 million, compared with $735 million in the previous quarter.
Third-quarter financial results were impacted by lower benchmark
prices, planned turnaround activity, unplanned outages, and a FIFO
loss in the U.S. Refining segment. Net earnings in the third
quarter were $820 million, compared with $1.0 billion in the
previous quarter.
Long-term debt, including the current portion, was $7.2 billion
at September 30, 2024. Net debt decreased slightly from the prior
quarter to approximately $4.2 billion at September 30, 2024,
primarily due to free funds flow of $614 million and a release of
non-cash working capital, offset by shareholder returns of
$1.1 billion. Following the achievement of the net debt target
in July 2024, the company continues to steward toward a net debt
level near $4.0 billion and returning 100% of EFFF to shareholders
over time in accordance with its financial framework.
Growth projects and capital investments
In the Oil Sands segment, the company continues to progress the
tie-back of Narrows Lake, building a 17-kilometre pipeline
connecting the reservoir to the Christina Lake processing facility,
which will add between 20,000 bbls/d and 30,000 bbls/d of
production. The project is approximately 93% constructed, as
critical tie-ins to the Narrows Lake pipeline were completed during
the Christina Lake turnaround. The project remains on track for
first production mid-2025. At Sunrise, as part of the growth
program, the company brought two new well pads online in the third
quarter, which will continue to ramp up into the fourth quarter.
One additional well pad will come online in early 2025. The
optimization project at Foster Creek remains on schedule for
startup by the middle of 2026, with most modules and major pieces
of equipment in place and pipe installation underway. At the
Lloydminster conventional heavy oil assets, 20 new production wells
were drilled in the third quarter, positioning the company for
growth from this business in 2025.
The West White Rose project reached a significant milestone with
the completion of the SeaRose FPSO asset life extension work at the
dry dock in Belfast. The vessel is now sailing back to the White
Rose field where reconnection and commissioning will take place to
enable the existing field to resume production by year end. The
West White Rose project is now approximately 85% complete and
progressing on-schedule.
Dividend declarations and share purchases
The Board of Directors has declared a quarterly base dividend of
$0.180 per common share, payable on December 31, 2024 to
shareholders of record as of December 13, 2024.
In addition, the Board has declared a quarterly dividend on each
of the Cumulative Redeemable First Preferred Shares – Series 1,
Series 2, Series 3, Series 5 and Series 7 – payable on December 31,
2024 to shareholders of record as of December 13, 2024 as
follows:
Preferred shares dividend summary
Share series |
Rate (%) |
Amount ($/share) |
Series 1 |
2.577 |
0.16106 |
Series 2 |
5.935 |
0.37296 |
Series 3 |
4.689 |
0.29306 |
Series 5 |
4.591 |
0.28694 |
Series 7 |
3.935 |
0.24594 |
All dividends paid on Cenovus’s common and preferred shares will
be designated as “eligible dividends” for Canadian federal income
tax purposes. Declaration of dividends is at the sole discretion of
the Board and will continue to be evaluated on a quarterly
basis.
In the third quarter, the company returned approximately $1.1
billion to common shareholders, composed of $732 million from its
purchase of 28.4 million shares through its normal course issuer
bid (NCIB) and $329 million through base dividends.
Since the share buyback program began in November 2021, as at
October 28, Cenovus has purchased approximately 227 million common
shares, delivering $5.3 billion in returns to shareholders. The
current NCIB will expire on November 8, 2024. Cenovus has received
approval from the Board of Directors to apply for another NCIB
program. Cenovus will apply for approval to repurchase up to
approximately 127 million of the company’s common shares,
representing approximately 10% of its public float, as defined by
the TSX.
2024 planned maintenance
The following table provides details on planned maintenance
activities at Cenovus assets through 2024 and anticipated
production or throughput impacts.
Potential quarterly production/throughput impact
(Mbbls/d or MBOE/d)
|
Q4 |
Annualized impact |
Upstream |
Oil Sands |
0-3 |
7-10 |
Atlantic |
6-9 |
7-10 |
Conventional |
— |
2-4 |
Downstream |
Canadian Refining |
— |
12-14 |
U.S. Refining |
5-10 |
9-12 |
Sustainability
Cenovus’s 2023 Corporate Social Responsibility report was issued
in August, highlighting the company’s progress and performance
related to safety, Indigenous reconciliation, and inclusion &
diversity as well as its approach to governance. Cenovus remains
committed to delivering on its environmental projects and
performance, however recent changes to Canada’s Competition Act has
created uncertainty and risk around the company’s ability to speak
publicly about its actions.
Conference call today8 a.m. Mountain Time (10
a.m. Eastern Time)
Cenovus will host a conference call today, October 31, 2024,
starting at 8 a.m. MT (10 a.m. ET).
To join the conference call, please dial 888-307-2440 (toll-free
in North America) or 647-694-2812 to reach a live operator who will
join you into the call. A live audio webcast will also be available
and archived for approximately 30 days.
Advisory
Basis of Presentation
Cenovus reports financial results in Canadian dollars and
presents production volumes on a net to Cenovus before royalties
basis, unless otherwise stated. Cenovus prepares its financial
statements in accordance with International Financial Reporting
Standards (IFRS) Accounting Standards.
Barrels of Oil Equivalent
Natural gas volumes have been converted to barrels of oil
equivalent (BOE) on the basis of six thousand cubic feet (Mcf) to
one barrel (bbl). BOE may be misleading, particularly if used in
isolation. A conversion ratio of one bbl to six Mcf is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent value equivalency at the
wellhead. Given that the value ratio based on the current price of
crude oil compared with natural gas is significantly different from
the energy equivalency conversion ratio of 6:1, utilizing a
conversion on a 6:1 basis is not an accurate reflection of
value.
Product types
Product type by operating segment |
Three months endedSeptember 30,
2024 |
Oil Sands |
Bitumen (Mbbls/d) |
569.6 |
Heavy crude oil (Mbbls/d) |
16.3 |
Conventional natural gas (MMcf/d) |
10.4 |
Total Oil Sands segment production (MBOE/d) |
587.7 |
Conventional |
Light crude oil (Mbbls/d) |
4.6 |
Natural gas liquids (Mbbls/d) |
21.1 |
Conventional natural gas (MMcf/d) |
554.8 |
Total Conventional segment production
(MBOE/d) |
118.1 |
Offshore |
Light crude oil (Mbbls/d) |
9.0 |
Natural gas liquids (Mbbls/d) |
9.9 |
Conventional natural gas (MMcf/d) |
279.4 |
Total Offshore segment production (MBOE/d) |
65.5 |
Total upstream production (MBOE/d) |
771.3 |
Forward‐looking Information
This news release contains certain forward‐looking statements
and forward‐looking information (collectively referred to as
“forward‐looking information”) within the meaning of applicable
securities legislation about Cenovus’s current expectations,
estimates and projections about the future of the company, based on
certain assumptions made in light of the company’s experiences and
perceptions of historical trends. Although Cenovus believes that
the expectations represented by such forward‐looking information
are reasonable, there can be no assurance that such expectations
will prove to be correct. Forward‐looking information in this
document is identified by words such as “anticipate”, “continue”,
“deliver”, “expect”, “focus”, “plan”, “progress”, “steward”,
“target” and “will” or similar expressions and includes suggestions
of future outcomes, including, but not limited to, statements
about: returning Excess Free Funds Flow to
shareholders; shareholder returns, including renewing the company’s
normal course issuer bid; safety; growth plans and projects; Net
Debt; production guidance; the optimization project at Foster
Creek; the tie-back of Narrows Lake to Christina Lake; amount and
timing of production at Narrows Lake; production and timing of well
pads at Sunrise; drilling activity and production at the
Conventional Heavy Oil assets; return of the Sea Rose FPSO to the
White Rose Field and return of production; the construction of the
West White Rose project; 2024 planned maintenance; and dividend
payments.
Developing forward‐looking information involves reliance on a
number of assumptions and consideration of certain risks and
uncertainties, some of which are specific to Cenovus and others
that apply to the industry generally. The factors or assumptions on
which the forward‐looking information in this news release are
based include, but are not limited to: the allocation of free funds
flow; commodity prices, inflation and supply chain constraints;
Cenovus’s ability to produce on an unconstrained basis; Cenovus’s
ability to access sufficient insurance coverage to pursue
development plans; Cenovus’s ability to deliver safe and reliable
operations and demonstrate strong governance; and the assumptions
inherent in Cenovus’s 2024 corporate guidance available on
cenovus.com.
The risk factors and uncertainties that could cause actual
results to differ materially from the forward‐looking information
in this news release include, but are not limited to: the accuracy
of estimates regarding commodity production and operating expenses,
inflation, taxes, royalties, capital costs and currency and
interest rates; risks inherent in the operation of Cenovus’s
business; and risks associated with climate change and Cenovus’s
assumptions relating thereto and other risks identified under “Risk
Management and Risk Factors” and “Advisory” in Cenovus’s
Management’s Discussion and Analysis (MD&A) for the year ended
December 31, 2023.
Except as required by applicable securities laws, Cenovus
disclaims any intention or obligation to publicly update or revise
any forward‐looking statements, whether as a result of new
information, future events or otherwise. Readers are cautioned that
the foregoing lists are not exhaustive and are made as at the date
hereof. Events or circumstances could cause actual results to
differ materially from those estimated or projected and expressed
in, or implied by, the forward‐looking information. For additional
information regarding Cenovus’s material risk factors, the
assumptions made, and risks and uncertainties which could cause
actual results to differ from the anticipated results, refer to
“Risk Management and Risk Factors” and “Advisory” in Cenovus’s
MD&A for the periods ended December 31, 2023 and September 30,
2024, and to the risk factors, assumptions and uncertainties
described in other documents Cenovus files from time to time with
securities regulatory authorities in Canada (available on SEDAR+ at
sedarplus.ca, on EDGAR at sec.gov and Cenovus’s website at
cenovus.com.)
Specified Financial Measures
This news release contains references to certain specified
financial measures that do not have standardized meanings
prescribed by IFRS Accounting Standards. Readers should not
consider these measures in isolation or as a substitute for
analysis of the company’s results as reported under IFRS Accounting
Standards. These measures are defined differently by different
companies and, therefore, might not be comparable to similar
measures presented by other issuers. For information on the
composition of these measures, as well as an explanation of how the
company uses these measures, refer to the Specified Financial
Measures Advisory located in Cenovus’s MD&A for the period
ended September 30, 2024 (available on SEDAR+ at sedarplus.ca, on
EDGAR at sec.gov and on Cenovus's website at cenovus.com) which is
incorporated by reference into this news release.
Upstream Operating Margin and Downstream Operating
Margin
Upstream Operating Margin and Downstream Operating Margin, and
the individual components thereof, are included in Note 1 to the
interim Consolidated Financial Statements.
Total Operating Margin
Total Operating Margin is the total of Upstream Operating Margin
plus Downstream Operating Margin.
|
Upstream (5) |
Downstream (5) |
Total |
($ millions) |
Q3 2024 |
Q2 2024 |
Q3 2023 |
Q3 2024 |
Q2 2024 |
Q3 2023 |
Q3 2024 |
Q2 2024 |
Q3 2023 |
Revenues |
Gross Sales |
8,259 |
|
8,715 |
|
8,783 |
|
9,228 |
|
9,053 |
|
9,658 |
17,487 |
|
17,768 |
|
18,441 |
|
Less: Royalties |
(929 |
) |
(859 |
) |
(1,135 |
) |
— |
|
— |
|
— |
(929 |
) |
(859 |
) |
(1,135 |
) |
|
7,330 |
|
7,856 |
|
7,648 |
|
9,228 |
|
9,053 |
|
9,658 |
16,558 |
|
16,909 |
|
17,306 |
|
Expenses |
Purchased Product |
1,088 |
|
815 |
|
900 |
|
8,637 |
|
8,099 |
|
7,947 |
9,725 |
|
8,914 |
|
8,847 |
|
Transportation and Blending |
2,661 |
|
3,043 |
|
2,397 |
|
— |
|
— |
|
— |
2,661 |
|
3,043 |
|
2,397 |
|
Operating |
860 |
|
889 |
|
914 |
|
918 |
|
1,099 |
|
778 |
1,778 |
|
1,988 |
|
1,692 |
|
Realized (Gain) Loss on Risk Management |
(10 |
) |
20 |
|
(10 |
) |
(4 |
) |
8 |
|
11 |
(14 |
) |
28 |
|
1 |
|
Operating Margin |
2,731 |
|
3,089 |
|
3,447 |
|
(323 |
) |
(153 |
) |
922 |
2,408 |
|
2,936 |
|
4,369 |
|
5 Found in the September 30, 2024, or the June
30, 2024, interim Consolidated Financial Statements.
Adjusted Funds Flow, Free Funds Flow and
Excess Free Funds Flow
The following table provides a reconciliation of cash from (used
in) operating activities found in Cenovus’s Consolidated Financial
Statements to Adjusted Funds Flow, Free Funds Flow and Excess Free
Funds Flow. Adjusted Funds Flow per Share – Basic and Adjusted
Funds Flow per Share – Diluted are calculated by dividing Adjusted
Funds Flow by the respective basic or diluted weighted average
number of common shares outstanding during the period and may be
useful to evaluate a company’s ability to generate cash.
|
Three Months Ended |
($ millions) |
September 30, 2024 |
June 30, 2024 |
September 30, 2023 |
Cash From (Used in) Operating Activities (5) |
2,474 |
2,807 |
2,738 |
(Add) Deduct: |
|
|
|
Settlement of Decommissioning Liabilities |
(74) |
(48) |
(68) |
Net Change in Non-Cash Working Capital |
588 |
494 |
(641) |
Adjusted Funds Flow |
1,960 |
2,361 |
3,447 |
Capital Investment |
1,346 |
1,155 |
1,025 |
Free Funds Flow |
614 |
1,206 |
2,422 |
Add (Deduct): |
|
|
|
Base Dividends Paid on Common Shares |
(329) |
(334) |
(264) |
Dividends Paid on Preferred Shares |
(9) |
(9) |
— |
Settlement of Decommissioning Liabilities |
(74) |
(48) |
(68) |
Principal Repayment of Leases |
(74) |
(75) |
(70) |
Acquisitions, Net of Cash Acquired |
(4) |
(5) |
(32) |
Proceeds From Divestitures |
22 |
— |
1 |
Excess Free Funds Flow |
146 |
735 |
1,989 |
5 Found in the September, 30, 2024, or the June
30, 2024, interim Consolidated Financial Statements.
Cenovus Energy Inc.
Cenovus Energy Inc. is an integrated energy company with oil and
natural gas production operations in Canada and the Asia Pacific
region, and upgrading, refining and marketing operations in Canada
and the United States. The company is focused on managing its
assets in a safe, innovative and cost-efficient manner, integrating
environmental, social and governance considerations into its
business plans. Cenovus common shares and warrants are listed on
the Toronto and New York stock exchanges, and the company’s
preferred shares are listed on the Toronto Stock Exchange. For more
information, visit cenovus.com.
Find Cenovus on Facebook, X, LinkedIn, YouTube and
Instagram.
Cenovus contacts
InvestorsInvestor Relations general
line403-766-7711
MediaMedia Relations general
line403-766-7751
Grafico Azioni Cenovus Energy (TSX:CVE)
Storico
Da Ott 2024 a Nov 2024
Grafico Azioni Cenovus Energy (TSX:CVE)
Storico
Da Nov 2023 a Nov 2024