Oilsands activity helped Cenovus pump out second-highest quarterly production ever

CALGARY — Cenovus Energy Inc. is the latest Canadian oilsands company to report surging production levels just in time for the anticipated startup of the Trans Mountain pipeline expansion.

The Calgary-based company said Thursday it saw its second-highest quarterly production ever in the fourth quarter of 2023, with output of 808,600 barrels of oil equivalent per day.

That compares with 806,900 boe/d in the same period of last year and represents an increase of approximately 12,000 barrels per day from the third quarter of 2023.

The uptick in output was largely due to strong performance from Cenovus' oilsands assets, in particular its Foster Creek site in northern Alberta where new well pads added about 10,000 barrels per day of production relative to the third quarter.

Cenovus is also bringing new well pads on at its Christina Lake oilsands site and anticipates continued production growth at its Sunrise oilsands facility as it brings on new well packages over the next two to three years.

In a conference call with analysts, CEO Jon McKenzie said investments in oilsands growth projects are beginning to bear fruit.

While planned maintenance and turnaround projects will temper oilsands output over the summer, he said 2024 should exceed 2023 in terms of total production.

"December was probably the second-highest production month that we've ever had as a company," McKenzie said.

"We expect Q4 to be even bigger next year than it was this year, particularly as we bring on more well pads right across the business."

Shares in Cenovus rose seven per cent on Thursday to close at $23.51.

For the full year 2023, Cenovus' crude oil production from the oilsands averaged 593,400 barrels per day, including 186,300 barrels per day at Foster Creek and 237,400 barrels per day at Christina Lake.

The company's 2024 guidance calls for oilsands production to be in the range of 590,000 to 610,000 barrels per day.

Additional production growth is expected in 2025 and 2026 due to ongoing optimization work at both Foster Creek and Christina Lake.

Cenovus' higher production in its most recent quarter was offset by lower commodity prices, so that the company's fourth-quarter earnings fell to $743 million from $784 million a year earlier.

Revenue for the quarter also declined to $13.13 billion, down from $14.06 billion in the fourth quarter of 2022.

But the company's near-record-setting output is part of an overall industry trend as Canadian oilsands producers ramp up output in preparation for the Trans Mountain pipeline expansion, which is in the final stages of construction and will provide the industry with a long-awaited additional 590,000 barrels per day of export capacity to the West Coast.

The additional pipeline capacity not only gives Canadian oil companies the ability to grow their production, it is also expected to reduce the price discount Canadian producers typically take on their oil in part due to a lack of export capacity.

Cenovus is a major contracted shipper on Trans Mountain, and McKenzie said the company continues to expect the startup of the expansion to take place by the middle of this year — in spite of the latest round of construction-related difficulties that have plagued the project.

Earlier this month, Imperial Oil Ltd. also announced its oilsands production surged in the fourth quarter, with its Kearl oilsands facility achieving record output in the final three months of 2023.

This report by The Canadian Press was first published Feb. 15, 2024.