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Cenovus’s 2020 budget maintains focus on cost leadership, capital discipline

Calgary, Alberta (December 10, 2019) – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) remains committed to delivering increasing shareholder value through cost leadership, capital discipline and continued safe and reliable operations. These commitments, combined with its top-tier upstream assets, successful crude-by-rail program and joint ownership in two high-performing U.S. refineries, position Cenovus to continue generating significant free funds flow while enabling the company to further strengthen its balance sheet in 2020.

Cenovus plans to invest between $1.3 billion and $1.5 billion in 2020, about 70% of which is sustaining capital primarily to maintain base production at its Foster Creek and Christina Lake oil sands operations. The increase in total planned capital spending, compared with Cenovus’s 2019 forecast, is consistent with the outlook provided at the company’s Investor Day earlier this year and is largely due to the deferral of sustaining capital in 2019 following the introduction of mandatory production curtailment in Alberta. Cenovus also plans to advance high-return projects to sanction-ready status for possible final investment decisions as early as the second half of 2020, conditional on improved market access.

As a result of structural improvements achieved over the past several years at its oil sands operations, Cenovus expects to further reduce non-fuel per-barrel operating costs and maintain low sustaining capital costs in 2020.

“This budget positions us well to generate adjusted funds flow of more than $3 billion in 2020 under our price assumptions – a strong start for the first year of our five-year business plan designed to generate significant free funds flow,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “Our priorities for 2020 include further strengthening our balance sheet, improving market access, returning cash to shareholders and advancing high-return organic opportunities to sanction-ready status.”

Highlights:

  • Total capital expenditures of $1.4 billion, consistent with Investor Day outlook
  • Total production increase of 7% compared with 2019 guidance, as Cenovus’s crude-by-rail program, coupled with the Government of Alberta’s Special Production Allowances, positions the company to move to unconstrained production levels
  • Per-barrel oil sands non-fuel operating costs decrease by approximately 5%
Cenovus’s Christina Lake project

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.

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Steam generators at Cenovus’s Foster Creek project in northern Alberta.

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.

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Cenovus’s Wolf Lake Natural Gas Plant in the Deep Basin in west central Alberta.

Cenovus’s Wolf Lake Natural Gas Plant in the Deep Basin in west central Alberta.

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