Cenovus delivers exceptional third-quarter performance

Net debt down $1.6 billion from previous quarter

Calgary, Alberta (October 31, 2018) – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) generated more than $700 million of free funds flow and nearly $1 billion in adjusted funds flow in the third quarter, driven by exceptional operating performance in its oil sands and refining and marketing businesses. Oil sands production exceeded 376,000 barrels per day (bbls/d) with record-low operating costs for the second straight quarter. Cenovus’s 50%-owned refineries, operated by Phillips 66, processed record oil volumes for the quarter. The company also benefited from a year-over-year increase in the price of Western Canadian Select (WCS), even as the price differential between WCS and West Texas Intermediate (WTI) more than doubled. While the wider differential impacted upstream cash generation, it created a feedstock cost advantage for the refining business which contributed strong operating margin. Cash from operations, together with $625 million in proceeds from the sale of Cenovus’s Pipestone Partnership, helped reduce net debt to below $8.0 billion, down about $1.6 billion from the end of the second quarter. Cenovus also signed deals to move significant quantities of oil by rail over the next three years. Due to strong operational performance and efficient use of capital, the company has reduced forecast 2018 capital spending by about $250 million with essentially no change to its production guidance.

Key developments

  • Generated cash from operating activities of nearly $1.3 billion, compared with $592 million in the third quarter of 2017
  • Achieved free funds flow of more than $700 million, up 30% from the third quarter of 2017
  • Reduced oil sands per-unit operating costs to $6.59/bbl, down 13% year over year
  • Redeemed US$800 million in unsecured notes on October 29, 2018
  • Signed contracts to move up to 100,000 bbls/d of oil by rail, ramping up through 2019
  • Received corporate credit rating upgrade from Moody’s to Ba1, stable

Read the complete news release

Photos

Cenovus’s Christina Lake project in northern Alberta uses steam-assisted gravity drainage (SAGD) technology to produce oil. The process involves drilling into the reservoir and injecting steam at a low pressure to soften the oil so it can be pumped to the surface.
Courtesy Cenovus Energy
Steam generators at Cenovus’s Foster Creek project in northern Alberta. The project uses a process called steam-assisted gravity drainage (SAGD) to produce oil, which involves drilling into the reservoir and injecting steam at a low pressure to soften the oil so it can be pumped to the surface.
Courtesy Cenovus Energy
Cenovus’s Wolf Lake Natural Gas Plant in the Deep Basin in west central Alberta.
Courtesy Cenovus Energy