Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) delivered strong
operating and financial performance in 2022, with $11.4 billion in
cash from operating activities, $11.0 billion in adjusted funds
flow and $7.3 billion in free funds flow, enabling more than $3.4
billion in shareholder returns. In the fourth quarter, reliable
upstream operating performance drove nearly $3.0 billion in cash
from operating activities, $2.3 billion in adjusted funds flow and
$1.1 billion in free funds flow. Production was 806,900 barrels of
oil equivalent per day (BOE/d) 1 and downstream throughput was
473,500 barrels per day (bbls/d) as the company’s operated
downstream assets performed well in the fourth quarter.
“In 2022, we further fortified our balance sheet, reducing our
net debt by more than half. As a result, we delivered substantial
shareholder returns and executed strategic and opportunistic
acquisitions and divestitures,” said Alex Pourbaix, Cenovus
President & Chief Executive Officer. “As we restart our
wholly-owned Superior Refinery, and complete the Toledo Refinery
acquisition, we will substantially increase our pipeline-connected
heavy oil refining capacity and generate expanded margins in our
U.S. Manufacturing business.”
Highlights
- Reduced net debt to $4.3 billion, a decline of more than $5.3
billion year over year and $1.0 billion from the prior quarter.
Long-term debt, including current portion, at the end of the fourth
quarter was $8.7 billion, down from $12.4 billion at year-end
2021.
- Provided annual common shareholder returns of over $3.4
billion, including more than $2.5 billion in share buybacks in 2022
($387 million of buybacks in the fourth quarter).
- Achieved 2022 full-year production
of 786,200 BOE/d, including 586,600 bbls/d of crude oil from Oil
Sands, and total fourth quarter production of 806,900 BOE/d.
Financial, production & throughput
summary |
(For the period ended December 31) |
2022 Q4 |
2022 Q3 |
% change |
2021 Q4 |
% change |
2022 FY |
2021 FY |
% change |
Financial ($ millions, except per share
amounts) |
Cash from operating
activities |
2,970 |
4,089 |
(27) |
2,184 |
36 |
11,403 |
5,919 |
93 |
Adjusted funds flow2 |
2,346 |
2,951 |
(21) |
1,948 |
20 |
10,978 |
7,248 |
51 |
Per share (basic)2 |
1.22 |
1.53 |
- |
0.97 |
- |
5.63 |
3.59 |
- |
Per share (diluted)2 |
1.19 |
1.49 |
- |
0.97 |
- |
5.47 |
3.54 |
- |
Capital investment |
1,274 |
866 |
47 |
835 |
53 |
3,708 |
2,563 |
45 |
Free funds flow2 |
1,072 |
2,085 |
(49) |
1,113 |
(4) |
7,270 |
4,685 |
55 |
Excess free funds flow2 |
786 |
1,756 |
(55) |
1,169 |
(33) |
- |
- |
- |
Net earnings (loss) |
784 |
1,609 |
(51) |
(408) |
- |
6,450 |
587 |
999 |
Per share (basic) |
0.40 |
0.83 |
- |
(0.21) |
- |
3.29 |
0.27 |
- |
Per share (diluted) |
0.39 |
0.81 |
- |
(0.21) |
- |
3.20 |
0.27 |
- |
Long-term debt, including
current portion |
8,691 |
8,774 |
- |
12,385 |
(30) |
8,691 |
12,385 |
(30) |
Net debt |
4,282 |
5,280 |
(19) |
9,591 |
(55) |
4,282 |
9,591 |
(55) |
Production and throughput (before royalties, net to
Cenovus) |
Oil and NGLs (bbls/d)1 |
664,900 |
633,100 |
5 |
678,300 |
(2) |
641,900 |
642,300 |
- |
Conventional natural gas
(MMcf/d) |
852.0 |
868.7 |
(2) |
883.5 |
(4) |
866.1 |
895.5 |
(3) |
Total upstream
production (BOE/d)1 |
806,900 |
777,900 |
4 |
825,300 |
(2) |
786,200 |
791,500 |
(1) |
Total downstream
throughput (bbls/d) |
473,500 |
533,500 |
(11) |
469,900 |
1 |
493,700 |
508,000 |
(3) |
1 See Advisory for production by product type. 2 Non-GAAP
financial measure or contains a non-GAAP financial measure. See
Advisory.
Fourth-quarter resultsCenovus delivered strong
upstream production performance in the quarter, while extreme
weather challenges in December, along with third-party pipeline
outages impacted downstream operations.
Operating results1Cenovus’s
total revenues were approximately $14.1 billion in the fourth
quarter, down from $17.5 billion in the third quarter, mainly due
to lower benchmark commodity prices, which drove reduced prices for
the company’s products across the upstream and downstream
businesses. Upstream revenues were $7.4 billion, compared with $9.0
billion in the previous quarter. Downstream revenues were about
$8.4 billion, compared with nearly $10.9 billion in the third
quarter.
Total operating margin3 was $2.8 billion, compared with more
than $3.3 billion in the third quarter. Upstream operating margin4
was $2.2 billion, compared with $2.8 billion in the third quarter.
The quarter-over-quarter reduction was driven by lower Brent and
West Texas Intermediate prices and a wider light-heavy crude
differential. In addition, Oil Sands sales volumes in the fourth
quarter were lower than production by approximately 18,000 bbls/d
as a third-party pipeline outage led the company to store product
in December. Downstream operating margin4 was $558 million,
compared with $490 million in the third quarter. The increase in
downstream operating margin was driven by a wider light-heavy crude
differential, which drove an increase in gross margin. The
operating margin in U.S. Manufacturing was negatively affected in
both the third and fourth quarters by the cost of processing crude
oil that was purchased in prior periods at higher prices and other
impacts of pricing changes on inventory values, along with lower
market crack spreads. In the fourth quarter, the company also
experienced unplanned operational issues, third-party pipeline
outages and weather impacts in late December at most of its
downstream facilities.
Total upstream production was 806,900 BOE/d in the fourth
quarter, an increase of nearly 30,000 BOE/d compared with the third
quarter. Christina Lake production was 250,300 bbls/d, in line with
third-quarter production of 252,800 bbls/d. Foster Creek production
increased to 195,900 bbls/d, compared with 182,400 bbls/d in the
previous quarter, reflecting increased utilization and improved
reliability as the third quarter was impacted by planned and
unplanned maintenance. Sunrise production was 44,800 bbls/d,
compared with 30,900 bbls/d in the third quarter, mainly as a
result of the acquisition of the remaining 50% working interest,
which closed in August. At the Lloydminster thermal projects,
production was 102,500 bbls/d, in line with the previous quarter of
102,100 bbls/d. Conventional production was 125,500 BOE/d, in line
with third-quarter production of 126,200 BOE/d.
Offshore production was 70,200 BOE/d compared with 64,600 BOE/d
in the previous quarter, with the increase mainly related to
additional volumes from the MBH and MDA fields in Indonesia coming
online in the fourth quarter. In the Atlantic region, the drydock
program in Spain for the partner-operated Terra Nova floating
production, storage and offloading vessel was completed and it is
anticipated to return to operations in the second quarter of
2023.
In the fourth quarter, crude utilization in the Canadian
Manufacturing segment was 85%, with throughput of 94,300 bbls/d, a
decrease from 89% and 98,500 bbls/d in the third quarter. The
Lloydminster Refinery ran well, however, Canadian Manufacturing
utilization in the fourth quarter was impacted in late December by
an unplanned outage at the Lloydminster Upgrader and a subsequent
unrelated site-wide power outage. The upgrader returned to full
rates in mid-January. Canadian Manufacturing delivered operating
margin of $278 million compared with $246 million in the third
quarter, with the difference mainly due to a wider Canadian
light-heavy crude differential, resulting in lower feedstock costs
and higher gross margin.
In U.S. Manufacturing, crude utilization of 75% and throughput
of 379,200 bbls/d were down from 87% and 435,000 bbls/d in the
third quarter. Fourth-quarter results were affected by extreme
winter storms and severe cold temperatures in December, coupled
with unplanned operational challenges and third-party pipeline
outages, which impacted refinery throughput across the U.S. The
Lima Refinery and the Borger Refinery returned to full rates in
January and continue to operate reliably. At the non-operated Wood
River Refinery, repairs are underway related to a December incident
that reduced throughput. Wood River utilization has steadily
increased since the first week of January, with the refinery
currently operating at a substantial proportion of normal
throughput and expected to return to normal rates during the second
quarter. The acquisition of the remaining 50% of the Toledo
Refinery remains on track to close by the end of February, with a
plan to ramp to full rates by mid-second quarter. In Superior, the
refinery began circulating hydrocarbons in mid-February. Throughput
is expected to commence around mid-March and the refinery remains
on schedule to ramp up to full operations in the second quarter of
2023.
________________________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 resultsFourth-quarter cash from
operating activities, which includes changes in non-cash working
capital, was nearly $3.0 billion, with adjusted funds flow of $2.3
billion and $1.1 billion in free funds flow. Capital investment was
$1.3 billion, an increase from the prior quarter as the company
directed spending towards sustaining production and throughput.
This included drilling stratigraphic wells as part of the
integrated winter drilling program in Oil Sands, as well as
drilling, completion and tie-in activities and infrastructure
projects to support multi-year development in the Conventional
segment. It also included investment in the Superior Refinery
rebuild, the Terra Nova asset life extension project and
preliminary work to restart construction on the West White Rose
project. In addition, the company purchased materials in the fourth
quarter of 2022 for 2023 capital projects. Fourth-quarter adjusted
funds flow was impacted by lower overall commodity prices and lower
Oil Sands sales volumes when compared to production, as a
third-party pipeline outage led the company to store product in
December. This additional product inventory is expected to be sold
in the first quarter of 2023. In addition, adjusted funds flow was
impacted by the reduced throughput in Cenovus’s downstream
operations. In the U.S. Manufacturing segment, operating margin was
reduced by approximately $180 million related to the cost of
processing crude oil purchased in prior periods at higher prices,
as well as other impacts of pricing changes on inventory
values.
Fourth-quarter net earnings were $784 million, compared with
$1.6 billion in the previous quarter. The decline in net earnings
was primarily due to lower operating margin and non-cash
impairments of $266 million (net of reversals) in the U.S.
Manufacturing segment and a revaluation gain of $549 million in the
third quarter related to the Sunrise acquisition.
Long-term debt, including the current portion, was $8.7 billion
at December 31, 2022, compared with $12.4 billion at December 31,
2021. Net debt was approximately $4.3 billion at December 31, 2022,
down $1.0 billion from September 30, 2022 and $5.3 billion lower
year over year. Net debt decreased in the fourth quarter driven by
free funds flow of about $1.1 billion and a draw in non-cash
working capital of $765 million, partially offset by a combined
base and variable dividend payment of $420 million, as well as $387
million for share buybacks. The working capital draw was mainly
attributable to a decrease in accounts receivable and higher income
tax payable.
During the fourth quarter of 2022, Moody’s Investors Service
upgraded the company’s credit rating to “Baa2” and DBRS Morningstar
raised its rating to “BBB (high),” citing the significant reduction
of gross debt, success in integrating the legacy Husky assets,
Cenovus’s integrated operating model and commitment to financial
discipline.
In 2022, the company recorded a cash tax liability of $1.2
billion, which is reflected in Cenovus’s 2022 annual adjusted funds
flow. The cash payment for that liability will be made in the first
quarter of 2023. Given the 2022 cash tax payment and the Toledo
Refinery transaction purchase price of about US$300 million plus
customary closing adjustments, Cenovus’s net debt will increase in
the first quarter of 2023. Taking into account net debt of $4.3
billion at the end of the fourth quarter, assuming commodity prices
remain around their current levels and that Cenovus is able to
achieve the planned startup of Toledo and Superior, the company
expects net debt to fall below its $4.0 billion floor around the
end of the third quarter.
Full-year resultsIn 2022, Cenovus total
upstream production averaged 786,200 BOE/d, compared with 791,500
BOE/d in 2021, which reflects the sales of the Tucker oil sands
project and Wembley conventional asset, partially offset by higher
Oil Sands production in the year. Oil Sands crude production was
586,600 bbls/d, including 191,000 bbls/d at Foster Creek, an
increase of 11,100 bbls/d from 2021, and about 246,500 bbls/d at
Christina Lake, up 9,700 bbls/d from the previous year. Full-year
production from the Lloydminster thermal projects was 99,900
bbls/d, compared with 97,700 bbls/d in 2021, which reflects the
addition of the Spruce Lake North project in the third quarter of
2022. Production from Sunrise was 31,300 bbls/d, compared with
25,900 bbls/d in 2021, with the increase largely driven by the
acquisition of the remaining 50% working interest in Sunrise, which
closed in August 2022. Conventional production was 127,200 BOE/d,
compared with 133,600 BOE/d in 2021, with the decrease mainly
related to assets divested in the second half of 2021 and in 2022,
as well as natural declines. Offshore total production was 70,300
BOE/d, compared with 74,400 BOE/d in the prior year, reflecting the
restructuring of the White Rose field working interest in the
second quarter of 2022, combined with changes to contracts in
China. These were partially offset by first gas production at the
MBH and MDA fields offshore Indonesia in the fourth quarter of
2022.
In Canadian Manufacturing, average utilization for the year was
84% and average throughput was 92,900 bbls/d, compared with 96% and
106,500 bbls/d in 2021. Crude oil throughput decreased in 2022
compared with 2021 due to planned turnarounds at the upgrader and
Lloydminster Refinery. Cold weather impacts and operational outages
further reduced throughput at the upgrader in the fourth quarter of
2022. In U.S. Manufacturing, full-year utilization was 80% and
average throughput was 400,800 bbls/d, comparable to 2021.
Total revenues were about $66.9 billion in 2022 and total
operating margin was $14.3 billion, compared with revenues of $46.4
billion and total operating margin of $9.4 billion in 2021.
Year-over-year increases in both total revenues and total operating
margin were largely related to increased commodity prices.
Cash from operating activities was $11.4 billion for the year,
compared with $5.9 billion in 2021. Adjusted funds flow was $11.0
billion and free funds flow was about $7.3 billion. Total capital
investment for 2022 was approximately $3.7 billion, primarily
concentrated on sustaining production at the company’s upstream
assets, refining reliability initiatives and yield optimization
projects, as well as investment in the Superior Refinery rebuild.
Full-year net earnings for 2022 were about $6.5 billion compared to
$587 million the previous year.
2023 planned maintenanceThe following table
provides details on planned turnaround activities at Cenovus assets
in 2023 and anticipated production or throughput impacts.
2023 Planned maintenance |
Potential quarterly production/throughput impact
(Mbbls/d) |
|
Q1 |
Q2 |
Q3 |
Q4 |
Upstream |
|
Foster Creek |
- |
18 - 20 |
- |
- |
Lloydminster Thermals |
- |
1 - 2 |
1 - 2 |
- |
Atlantic |
- |
- |
1 - 2 |
- |
Downstream |
|
U.S. Manufacturing |
18 - 22 |
- |
18 - 22 |
50 - 60 |
ReservesCenovus’s proved and probable reserves
are evaluated each year by independent qualified reserves
evaluators. At the end of 2022, Cenovus total proved reserves were
relatively unchanged at approximately 6.1 billion BOE, while total
proved plus probable reserves increased 7% to approximately 8.9
billion BOE. Total proved bitumen reserves were approximately 5.6
billion barrels, consistent with 2021, while total proved plus
probable bitumen reserves increased 8% to approximately 8.0 billion
barrels. At year-end 2022, Cenovus had a proved reserves life index
of approximately 21 years, and a proved plus probable reserves life
index of approximately 31 years.
More details about Cenovus’s reserves and other oil and gas
information are available in the Advisory, and the Management’s
Discussion & Analysis (MD&A), Annual Information Form (AIF)
and Annual Report on Form 40-F for the year ended December 31,
2022, which will be available on SEDAR at sedar.com, EDGAR at
sec.gov and Cenovus’s website at cenovus.com.
Cenovus year-end disclosure documentsToday,
Cenovus is filing its audited Consolidated Financial Statements,
MD&A and AIF with Canadian securities regulatory authorities.
The company is also filing its Annual Report on Form 40-F for the
year ended December 31, 2022 with the U.S. Securities and Exchange
Commission. Copies of these documents will be available on SEDAR at
sedar.com, EDGAR at sec.gov and the company's website at
cenovus.com under Investors. They can also be requested free of
charge by emailing investor.relations@cenovus.com.
Dividend declarations and share
purchasesCenovus’s shareholder returns framework has a
target of returning 50% of excess free funds flow to shareholders
for quarters where the ending net debt is between $9 billion and $4
billion. In the fourth quarter, the company bought approximately 15
million shares, delivering $387 million in returns to
shareholders.
In 2022, the company returned more than $2.5 billion in value
through its share buyback program and delivered over $900 million
to shareholders in both base and variable dividends.
The Board of Directors has declared a quarterly base dividend of
$0.105 per common share, payable on March 31, 2023 to shareholders
of record as of March 15, 2023.
In addition, the Board declared a quarterly dividend on each of
the Cumulative Redeemable First Preferred Shares – Series 1, Series
2, Series 3, Series 5 and Series 7 – payable on March 31, 2023
to shareholders of record as of March 15, 2023 as follows:
Preferred shares dividend summary |
|
Rate (%) |
Amount ($/share) |
Share
series |
Series
1 |
2.577 |
0.16106 |
Series 2 |
5.863 |
0.36142 |
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.
SustainabilityCenovus’s Chief Sustainability
Officer, Rhona DelFrari, has been promoted to Executive
Vice-President, Stakeholder Engagement (from Senior
Vice-President), reflecting the growing criticality of the
portfolio to the company’s long-term success as well as DelFrari’s
industry leadership and expertise.
“Environmental, social and governance progress, and energy and
climate policy have never been more central to the strategic
decisions of our company,” said Pourbaix. “Rhona’s leadership in
ensuring the opportunities and impacts of sustainability
expectations are embedded in our business plans, and her passion
for advancing our Indigenous engagement and social investment
activities contribute significantly to Cenovus’s performance.”
Cenovus and its Pathways Alliance peers reached a notable
milestone in the fourth quarter, advancing plans to build one of
the world’s largest carbon capture and storage facilities. The
Alliance has entered into a Carbon Sequestration Evaluation
Agreement with the Government of Alberta and has started a detailed
evaluation of its proposed geological storage hub.
The company continued to deliver on its commitment to
sustainability leadership in 2022, including advancing Indigenous
reconciliation. The company’s Indigenous Housing Initiative has
funded 81 new homes in the six First Nations and Métis communities
closest to its Foster Creek and Christina Lake oil sands operations
since the program was announced in January 2020. In 2022, Cenovus
spent the equivalent of about $1 million each day with Indigenous
businesses, part of efforts to help support economic
self-sufficiency in communities where it operates and progressing
the company’s environmental, social and governance (ESG) target of
spending a minimum $1.2 billion with Indigenous businesses between
2019 and year-end 2025. Since 2009, the company has spent about
$3.8 billion on goods and services with Indigenous businesses.
In the fourth quarter of 2022, as part of its focus on inclusion
& diversity, the company conducted a voluntary
self-identification survey, extending to employees in Canada and
the U.S. the option to confidentially share certain diversity
information and will use the results to help inform an additional
diversity target beyond gender. In December 2022, Cenovus announced
the appointment of Melanie A. Little to the company’s Board,
effective January 1, 2023. Ms. Little brings more than 20 years of
industry experience, including extensive knowledge of the midstream
business, especially in the U.S. This appointment also achieved the
Board’s commitment to have its representation include at least 30%
women by the close of its 2023 annual general meeting of
shareholders.
Further updates on Cenovus’s sustainability progress will be
released later this year in the company’s 2022 ESG report.
Conference call today9 a.m. Mountain Time
(11 a.m. Eastern Time)Cenovus will host a conference call
today, February 16, 2023, starting at 9 a.m. MT (11 a.m. ET).To
join the conference call without operator assistance, please
register here approximately 5 minutes in advance to receive an
automated call-back when the session begins. Alternatively, you can
dial 888-204-4368 (toll-free in North America) or 647-794-4605 to
reach a live operator who will join you into the call. A live audio
webcast will also be available and will be archived for
approximately 90 days. |
Advisory
Basis of
PresentationCenovus 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).
Barrels of Oil
EquivalentNatural 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.
Reserves Life IndexReserves life index is
calculated based on reserves for the applicable reserves category
divided by annual production.
Product types
Product type by operating segment |
|
Three months ended December 31,
2022 |
Full year endedDecember 31, 2022 |
Oil Sands |
Bitumen (Mbbls/d) |
593.5 |
570.3 |
Heavy crude oil (Mbbls/d) |
15.8 |
16.3 |
Conventional natural gas (MMcf/d) |
11.9 |
12.3 |
Total Oil Sands segment production (MBOE/d) |
611.2 |
588.7 |
Conventional |
Light crude oil (Mbbls/d) |
6.8 |
7.5 |
Natural gas liquids (Mbbls/d) |
26.1 |
23.8 |
Conventional natural gas (MMcf/d) |
555.3 |
576.1 |
Total Conventional segment production
(MBOE/d) |
125.5 |
127.2 |
Offshore |
Light crude oil (Mbbls/d) |
10.3 |
11.6 |
Natural gas liquids (Mbbls/d) |
12.4 |
12.4 |
Conventional natural gas (MMcf/d) |
284.8 |
277.7 |
Total Offshore segment production (MBOE/d) |
70.2 |
70.3 |
Total upstream production (MBOE/d) |
806.9 |
786.2 |
Forward‐looking
InformationThis 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 “achieve”, “anticipate”, “attain”, “continue”,
“deliver”, “expect”, “focus”, “on track”, “progressing”, “target”,
and “will” or similar expressions and includes suggestions of
future outcomes, including, but not limited to, statements about:
increasing pipeline-connected heavy oil refining capacity and
generating expanded margins in the U.S. Manufacturing business; the
return of the FPSO; the closing of the Toledo acquisition and
partial restart of operations at the Toledo Refinery and subsequent
ramp up; the restart of the Superior Refinery and subsequent ramp
up; the return to normal rates of throughput at the Wood River
Refinery; selling added inventory; the cash tax liability payment;
Net Debt fluctuations and achieving Net Debt below $4.0 billion;
turnaround activities and production or throughput impacts; the
Company’s shareholder return framework; Cenovus’s reserves;
construction of a carbon capture and storage facility through
Pathways Alliance; spending with Indigenous businesses; and further
updates regarding Cenovus’s ESG initiatives.
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 to reducing net debt; 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 2023 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 prices, inflation, operating and
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 MD&A for the year ended December 31,
2022.
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 period ended December 31, 2022, 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 sedar.com, 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. Readers should
not consider these measures in isolation or as a substitute for
analysis of the company’s results as reported under IFRS. 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 year ended December 31, 2022,
dated February 16, 2023, (available on SEDAR at sedar.com, 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
MarginUpstream Operating Margin and Downstream Operating
Margin, and the individual components thereof, are included in Note
1 to the Consolidated Financial Statements.
Total Operating MarginTotal Operating Margin is
the total of Upstream Operating Margin plus Downstream Operating
Margin.
|
Upstream (1) |
|
Downstream (1) |
|
Total |
($
millions) |
2022 |
|
Q4 2022 |
|
Q3 2022 |
|
2021 |
|
2022 |
|
Q4 2022 |
|
Q3 2022 |
|
2021 |
|
2022 |
|
Q4 2022 |
|
Q3 2022 |
|
2021 |
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Sales |
41,127 |
|
8,307 |
|
10,238 |
|
27,844 |
|
38,102 |
|
8,380 |
|
10,887 |
|
26,258 |
|
79,229 |
|
16,687 |
|
21,125 |
|
|
54,102 |
Less: Royalties |
4,868 |
|
875 |
|
1,226 |
|
2,454 |
|
— |
|
— |
|
— |
|
— |
|
4,868 |
|
875 |
|
1,226 |
|
|
2,454 |
|
36,259 |
|
7,432 |
|
9,012 |
|
25,390 |
|
38,102 |
|
8,380 |
|
10,887 |
|
26,258 |
|
74,361 |
|
15,812 |
|
19,899 |
|
|
51,648 |
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased Product |
6,833 |
|
1,157 |
|
2,397 |
|
4,059 |
|
32,501 |
|
7,071 |
|
9,691 |
|
23,111 |
|
39,334 |
|
8,228 |
|
12,088 |
|
|
27,170 |
Transportation and Blending |
12,194 |
|
2,962 |
|
2,800 |
|
8,714 |
|
— |
|
— |
|
3 |
|
— |
|
12,194 |
|
2,962 |
|
2,803 |
|
|
8,714 |
Operating |
3,789 |
|
955 |
|
915 |
|
3,241 |
|
3,050 |
|
759 |
|
780 |
|
2,258 |
|
6,839 |
|
1,714 |
|
1,695 |
|
|
5,499 |
Realized (Gain) Loss on Risk Management |
1,619 |
|
134 |
|
51 |
|
788 |
|
112 |
|
(8) |
|
(77) |
|
104 |
|
1,731 |
|
126 |
|
(26) |
|
|
892 |
Operating
Margin |
11,824 |
|
2,224 |
|
2,849 |
|
8,588 |
|
2,439 |
|
558 |
|
490 |
|
785 |
|
14,263 |
|
2,782 |
|
3,339 |
|
|
9,373 |
(1) Found in Note 1 of the
December 31, 2022, or the September 30, 2022, 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 |
|
Twelve Months Ended |
($ millions) |
Dec. 31,2022 |
|
|
Sept. 30,2022 |
|
|
Dec. 31,2021 |
|
|
Dec. 31,2022 |
|
|
Dec. 31,2021 |
|
Cash From (Used in) Operating Activities (1) |
2,970 |
|
|
4,089 |
|
|
2,184 |
|
|
11,403 |
|
|
5,919 |
|
(Add) Deduct: |
|
|
|
|
|
|
|
|
|
Settlement of Decommissioning
Liabilities |
(49 |
) |
|
(55 |
) |
|
(35 |
) |
|
(150 |
) |
|
(102 |
) |
Net Change in Non-Cash Working
Capital |
673 |
|
|
1,193 |
|
|
271 |
|
|
575 |
|
|
(1,227 |
) |
Adjusted Funds
Flow |
2,346 |
|
|
2,951 |
|
|
1,948 |
|
|
10,978 |
|
|
7,248 |
|
Capital Investment |
1,274 |
|
|
866 |
|
|
835 |
|
|
3,703 |
|
|
2,563 |
|
Free Funds
Flow |
1,072 |
|
|
2,085 |
|
|
1,113 |
|
|
7,270 |
|
|
4,685 |
|
Add (Deduct): |
|
|
|
|
|
|
|
|
|
Base Dividends Paid on Common
Shares |
(201 |
) |
|
(205 |
) |
|
(70 |
) |
|
|
|
|
Dividends Paid on Preferred
Shares |
— |
|
|
(9 |
) |
|
(8 |
) |
|
|
|
|
Settlement of Decommissioning
Liabilities |
(49 |
) |
|
(55 |
) |
|
(35 |
) |
|
|
|
|
Principal Repayment of
Leases |
(74 |
) |
|
(78 |
) |
|
(78 |
) |
|
|
|
|
Acquisitions, Net of Cash
Acquired |
(7 |
) |
|
(389 |
) |
|
— |
|
|
|
|
|
Proceeds From
Divestitures |
45 |
|
|
407 |
|
|
247 |
|
|
|
|
|
Excess Free Funds
Flow |
786 |
|
|
1,756 |
|
|
1,169 |
|
|
|
|
|
(1) Found in Note 1 of the
December 31, 2022, or the September 30, 2022, 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, Twitter, LinkedIn, YouTube and
Instagram.
Cenovus contacts
Investors |
Media |
Investor Relations general line403-766-7711 |
Media Relations general line403-766-7751 |
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