Canada's Cenovus says US refinery outlook improving, cuts 2025 production forecast
The Calgary, Alberta-based company has struggled recently with underperformance from its U.S. refineries. But Cenovus completed a major turnaround at its Toledo, Ohio, refinery in the second quarter, 11 days ahead of schedule, and said it anticipates being able to drive down costs there and at its other refining assets.
"We think there's probably another $2 per barrel that we can get out of our U.S. refining assets through time," said CEO Jon McKenzie on a conference call to discuss second-quarter results.
Analysts described Cenovus' results as positive thanks to the company's improved refinery performance and outlook, despite its lower oil and gas output forecast.
TD Cowen said in a note to clients that the company's 58% share of market capture in its U.S. refinery division was significantly better than expected.
Cenovus is now forecasting its 2025 upstream production will be between 805,000 barrels of oil equivalent per day and 825,000 boepd, compared with 805,000 to 845,000 boepd projected previously, because of the temporary shut-in of its Rush Lake thermal facility in west-central Saskatchewan.
A casing failure in an injection well in early May led to a steam release at Rush Lake, and the facility remains shut down.
For the second quarter, Cenovus' total upstream production was 765,900 boepd, down from 800,800 boepd a year earlier.
Wildfires in Alberta disrupted the company's operations, prompting Cenovus to temporarily shut down and evacuate its Christina Lake oil sands site and resulting in the loss of 2 million barrels of production during the quarter.
The company's share price jumped as much as 4.2% in early trade before settling back to last trade at C$20.95, a 0.08% increase on the day.
Cenovus' name has been floated by analysts and in media reports as a possible white-knight buyer for rival oil sands producer MEG Energy (MEG.TO), opens new tab, which is the subject of a hostile takeover attempt by Strathcona Resources (SCR.TO), opens new tab.
McKenzie declined to comment on the matter on Thursday. He said the company likes its existing asset portfolio and sees no holes in it.
Cenovus posted a net income of C$851 million ($614.57 million), or 45 Canadian cents per share, during the three months ended June 30, compared with C$1.0 billion, or 53 Canadian cents per share, a year earlier.
($1 = 1.3847 Canadian dollars)
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