Cenovus Energy Inc. delivered strong operating performance in 2018 while demonstrating financial resilience in a challenging and volatile Canadian commodity price environment. 

“In the fourth quarter, in some of the most difficult macro-economic conditions we’ve ever faced and while voluntarily managing our oil sands production lower, we remained relatively cash-flow neutral and continued to deleverage our balance sheet. I believe we are well positioned to make material progress on our business plan and further deleverage in 2019,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “Over the past year, Cenovus has become a stronger company through our focus on capital discipline and cost leadership while maintaining safe and reliable operations.”

Overall, Cenovus’s 2018 upstream financial results were significantly impacted by widening light-heavy oil price differentials, which reached historical highs in the fourth quarter, as well as realized hedging losses of $1.6 billion largely in the first three quarters of the year. At the same time, the wider differentials created a feedstock cost advantage for the company’s jointly owned refineries. Cenovus’s $2.9 billion net loss from continuing operations last year included three large non-cash charges: an exploration expense in the Deep Basin segment, a significant provision for office space that exceeds the company’s long-term requirements and a loss on the sale of the Pipestone business.

While managing through the market challenges of the fourth quarter, Cenovus continued to progress its deleveraging plans. The company reduced gross debt by 16% or US$1.2 billion during the fourth quarter of 2018 and January of this year.

Reserves

At the end of 2018, Cenovus had total proved reserves of approximately 5.2 billion BOE, in line with 2017, while total proved plus probable reserves decreased 2% to approximately 7 billion BOE. Proved bitumen reserves were approximately 4.8 billion barrels, while proved plus probable bitumen reserves were 6.4 billion barrels, both relatively unchanged from 2017.

Cenovus’s 2018 proved reserves finding and development (F&D) costs were $4.34/BOE, excluding changes in future development costs, down 40% from 2017, due to reduced capital spending and higher proved reserves additions in 2018. Three-year average F&D costs were $4.91/BOE, excluding changes in future development costs.

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