Cenovus’s 2019 budget demonstrates cost leadership and capital discipline

The Christina Lake oil sands operations. — Photo courtesy Cenovus Energy Inc.

Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) remains committed to increasing shareholder value through cost leadership, capital discipline and safe and reliable operations. These commitments, in combination with the company’s high-quality upstream assets and joint ownership in strong refining assets, are expected to further strengthen Cenovus’s ability to generate free funds flow and continue deleveraging its balance sheet in 2019.

Cenovus plans to invest between $1.2 billion and $1.4 billion in 2019, with the majority of the budget going to sustain base production at its Foster Creek and Christina Lake oil sands operations. The company also plans to complete construction of the Christina Lake phase G expansion. The 4% reduction in total planned capital spending, compared with Cenovus’s 2018 forecast, is largely the result of efficiency improvements at the company’s oil sands operations and reduced development plans for the Deep Basin as a result of the current commodity price environment.

The structural improvements Cenovus has achieved at its oil sands operations have resulted in reduced costs for maintaining base production and adding new production and have positioned the company to create additional value with more efficient use of capital. Cenovus expects to continue to realize low per-barrel oil sands operating and sustaining capital costs in 2019.

“We remain focused on delivering on our commitments to shareholders,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “With our low cost base and strong operations, we already set the performance standard for the in situ oil sands industry. And, as a result of our recent efforts to reduce costs and maintain capital discipline, I believe we are an even stronger and more resilient company than we were a year ago, and are well positioned to create additional value and return cash to shareholders over the long term.”

Highlights: (2019 budget vs. October 30, 2018 guidance)

• Per-barrel operating costs remaining essentially in line
• Per-barrel oil sands sustaining capital costs down 17% due to efficiency improvements and additional incremental capacity from Christina Lake phase G
• Industry leading full-cycle capital efficiencies at Christina Lake phase G of between $15,000 and $16,000 per barrel (bbl) of capacity
• Crude-by-rail volumes expected to ramp up to approximately 100,000 barrels per day (bbls/d) by the end of 2019