Oil and gas producer Cenovus Energy Inc CVE-T on Thursday beat quarterly profit estimates on higher downstream throughput and better-than-expected production margins, overcoming a fall in commodity prices.
Cenovus shares rose 4.6 per cent in afternoon trade.
The Canadian energy firm said downstream throughput was 538,000 barrels per day (bpd), about 18 per cent higher than a year earlier, as volumes ramped up after work was restarted at the Superior and Toledo refineries, having been offline due to separate fires at the respective locations.
Maintenance and repair costs at Superior and Toledo refineries are expected to normalize at the back end of the third quarter and into the fourth quarter, Cenovus said during a conference call.
The company also anticipates strong production and throughput in the second half of 2023.
Second-quarter upstream production, however, fell 4.2 per cent to 729,900 barrels of oil equivalent per day (boepd) from 762,000 boepd a year earlier due to the impact of wildfires and planned maintenance.
Wildfires in Canada’s main oil producing province Alberta also forced the company to lower its 2023 production outlook to between 775,000 boepd and 795,000 boepd, from its earlier forecast of 790,000 boepd and 810,000 boepd.
Second-quarter upstream operating margins, however, were above Goldman Sachs’ expectations, the brokerage wrote in a note.
The company’s net income for the April-June quarter fell 66 per cent from a year earlier to C$866-million ($657.41-million), or 44 Canadian cents per share, as crude prices, fell nearly 30 per cent from year-ago quarter.
Analysts had expected reported earnings per share of 41 Canadian cents.
“From where we sit, Cenovus Energy’s largely in-line second-quarter results are not indicative of the company’s execution capability – which we believe should surface in the second half of this year,” said RBC Capital Market analyst Greg Pardy.