Cenovus Energy narrowly missed analysts’ estimates for quarterly profit, but higher production and refinery throughput volumes pushed shares in the Canadian oil and gas producer as much as 7 per cent higher on Thursday.
Upstream production rose to 808,600 barrels of oil equivalent a day (boe/d) in the fourth quarter from 806,900 boe/d a year earlier, while downstream throughput increased to 579,100 barrels a day (b/d) from 473,500 b/d.
But U.S. refining margins were hit by a US$430-million non-cash write-down of refined product and crude oil inventory, as well as unplanned outages at Cenovus’s Lima, Ohio, refinery and the Borger, Tex., plant operated by Phillips 66.
Cenovus’s U.S. refineries have been a drag on earnings in recent years, after a deadly fire at its 160,000 b/d Toledo, Ohio, plant in 2022 and an explosion at its 49,000 b/d Superior, Wis., refinery in 2018. Both refineries restarted last year.
Superior is running at 65-70 per cent utilization rates, with plans to increase throughput in the second quarter of 2024, Cenovus said. The company’s other U.S. refineries are running at utilization rates north of 90 per cent in the first quarter.
Cenovus chief executive officer Jon McKenzie said while there was nothing technically wrong with Superior, there were difficulties in getting the plant to process crude at higher rates after it had been offline for five years.
“There’s no doubt Superior has been a bit of a fistfight for us,” Mr. McKenzie told an earnings call. “Anytime you take a refinery that hasn’t run for that length of time through its first winter you do find some deficiencies.”
Cenovus’s revenue fell to US$13.1-billion from US$14.1-billion, but came above estimates of US$12.8-billion.
Net income of 39 cents per share for the fourth quarter, compared with 40 cents per share expected by analysts, per LSEG data.
“Adjusted funds flow beat expectations (as did cash conversion aided by a working capital) and supported in-line shareholder returns, with upstream offsetting downstream financial results,” TPH analysts said in a note.
Cenovus returned US$2.8-billion to shareholders in 2023, lower than US$3.4-billion a year earlier. The company also reduced long-term debt to US$7.1-billion from US$8.7-billion in the same period.