SOURCE: ProactiveInvestors.com — Cenovus Energy’s (TSE:CVE) production jumped 22 per cent in the first quarter on the strength of its oil sands operations. This helped offset a slump in oil prices during the first three months of the year. During the quarter, the discount between Canadian heavy crude and the North American benchmark, West Texas Intermediate, widened 49 per cent from the same period in 2012. That represents a spread of USD$31.96 per barrel, according to the company’s statement.
Even though lower prices muted overall cash flow, which rose seven per cent to $1.28 per share, improved margins boosted operating cash flow from refining assets 97 per cent.
“Our refining business continues to deliver excellent results, clearly demonstrating the benefit of our integrated strategy. When our cash flow from heavy oil production is affected by low commodity prices, our refineries give us a financial advantage by turning that discounted crude into higher-value refined products,” said Brian Ferguson, the company’s president and CEO.
Operating income in the first quarter climbed 7 cents to 52 cents per share, topping analyst expectations by 4 cents.
Production at the Foster Creek and Christina Lake oil sands operations averaged more than 100,000 barrels per day, an increase of 22 per cent. Cenovus is planning expansion at both those properties. The company has submitted regulatory applications and environmental impact assessments for new phases. It expects to ramp up capacity by 85,000 barrels per day before the end of 2014.
Cenovus blamed foreign exchange losses for a 60 per cent drop in net earnings to $171 million, compared with $426 million in the first quarter of 2012.
by Anwar Ali - ProActive Investors