Cenovus profits more than triple

Oilsands operator Cenovus Energy Inc. reported its second-quarter profits more than tripled Tuesday, thanks to robust oil prices and strength in its refining operations.
Planned maintenance work cut into production from Cenovus Energy's Foster Creek plant in northeast Alberta in the second quarter. (Canadian Press/Cenovus )

Oilsands operator Cenovus Energy Inc. reported its second-quarter profits more than tripled Tuesday, thanks to robust oil prices and strength in its refining operations.

But wet weather and wildfires throughout Western Canada this spring took a toll on the Calgary-based company's production during the quarter.

"Through these adverse conditions, our teams demonstrated resilience. We have continued to deliver on our oil growth plans," chief executive Brian Ferguson told a conference call with analysts.

Before markets opened, Cenovus said its net profits soared to $655 million, or 85 cents per share in the three months ended June 30.

That compared with $183 million, or 24 cents a year earlier. That beat the average analyst estimate of 44 cents per share, according to a survey by Thomson Reuters.

Revenues in the quarter jumped to $4 billion from $3.1 billion a year earlier. Cash flow jumped to $939 million from $537 million.

Production at the company's Foster Creek and Christina Lake oilsands projects in northern Alberta was more than 58,000 barrels per day, net to the company. That was slightly less than the same period a year earlier due to planned maintenance work.

"Our manufacturing approach to developing these oilsands assets has been instrumental in bringing on expansions at industry-leading capital efficiencies while controlling quality, cost and safety," Ferguson said.

"We expect that this formula will allow us to advance our development plans through the next decade."

He added Cenovus is well on its way to meeting its goal of producing 400,000 barrels per day from the oilsands by the end of 2021.

Cenovus 3-month chart

Cenovus is a relatively new name in the oilpatch, having split off from natural gas producer Encana Corp. in late 2009.

Shares in the company dropped two per cent, or 77 cents, to $37.15 on the Toronto Stock Exchange.

In response to out-of-control forest fires in northern Alberta in May, Cenovus was forced to cut production from its Pelican Lake oil pool in northern Alberta. Production was curtailed for about two weeks, including one week with no output at all.

That site itself was never in peril, but a pipeline that carries crude from the region was out of commission as the fires knocked out its power supply.

Pelican Lake production is now back to its normal level of between 20,000 and 22,000 barrels of oil per day.

Flooding in Saskatchewan has also caused problems for Cenovus and its peers. At its Weyburn oilfield, production declined by 1,750 barrels per day. In the Lower Shaunavon and Bakken regions of the province, production was down about 3,100 barrels per day.

The company expects production will recover during the third quarter.

"We fully expect to meet our overall production guidance and exit- rate volume expectations for each of our operating areas," chief operating officer John Brannan told the conference call.

In June, the Calgary-based company announced it aims to produce about 500,000 barrels of oil per day by the end of the decade. The steep increase from its current daily output of around 135,000 barrels will be largely driven by a six-fold jump in oilsands production by the end of 2021.