Thursday, July 27, 2023

Cenovus Energy cuts production outlook due to impact from wildfires, profit slumps

Story by Reuters • 

A warning sign is pictured near well heads that inject steam into the ground and pump oil out at the Cenovus Energy Christina Lake SAGD project south of Fort McMurray
© Thomson Reuters

(Reuters) -Oil and gas producer Cenovus Energy Inc reported a 64% fall in second-quarter profit on Thursday, and lowered total production outlook for 2023 as wildfires in Canada's main oil producing province Alberta forced companies to curtail output.

Benchmark Brent crude averaged $79.92 a barrel in the second quarter, nearly 28% lower than a year earlier, pressured by the banking crisis and fears of a looming recession.

Some oil and gas companies in Alberta were also forced to re-curtail output as record-high temperatures and tinder-dry vegetation led to an intense, early start to the wildfire season in western Canada this year.

The fires caused more than 30,000 people to abandon their homes while oil and gas producers shut in at least 319,000 barrels of oil equivalent per day (boepd), or 3.7% of national production.

Cenovus lowered its 2023 upstream production outlook to between 775,000 barrels of oil equivalent per day (boepd) and 795,000 boepd, from its earlier forecast of 790,000 boepd and 810,000 boepd.

The company had said in May about 85,000 boepd of production, primarily dry gas, had been impacted in the company's Rainbow Lake, Kaybob-Edson, Elmworth-Wapiti and Clearwater operating areas.

Quarterly upstream production fell 4.2% to 729,900 boepd from 762,000 boepd a year earlier due to the impact of wildfire and planned maintenance.

The Canadian energy firm reported downstream throughput of 538,000 barrels per day (bpd), about 18% higher than a year earlier, as volumes ramped up after work was restarted at the Superior and Toledo refineries.

The company's net debt stood at C$6.4 billion as of June 30.

The Calgary, Alberta-based company reported a net income of C$866 million ($657.41 million), or 44 Canadian cents per share, for the quarter ended June 30, compared with C$2.43 billion, or C$1.19 per share, a year earlier.

Analysts had expected reported earnings per share of 41 Canadian cents.

($1 = 1.3173 Canadian dollars)

(Reporting by Arshreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)

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