Cenovus Energy provided a rosy outlook to investors this week during their virtual Investor Day meeting on Wednesday.
HIGHER SPENDING PLANNED FOR NEXT YEAR
The company set a capital spending budget of $2.6 to $3.0 billion next year, about half of which will be spent on its oil sands assets. The 2022 budget is about $300 million higher than this year’s forecast.
Cenovus expects to grow upstream production by about 4% next year, and increase downstream throughput by 6%. Oil sands production is expected to rise about 6%, to approximately 600,000 bbl/day.
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The company says it plans to boost output from Christina Lake to over 250,000 bbl/day without additional steam requirements. The five-year plan includes a 17-km steam tie-back to the Narrows Lake deposit, located just north of Christina Lake.
Spruce Lake North, a heavy oil property in the Lloydminster area, is expected to commence operation by the fourth quarter of next year. Cenovus is progressing plans to boost output and improve efficiencies from all the Lloyd thermal properties, which were acquired from Husky Energy at the beginning of 2021.
BIG PLANS FOR LLOYD COMPLEX
Almost $1 billion in capital spending was allocated to downstream operations, which includes debottlenecking of the Llodyminster Refinery. Once completed, throughput capacity will increase 8%, to as much as 31,500 bbl/day.
Longer term, Cenovus has big plans to boost capacity at the adjacent Lloyd Upgrader through various debottlenecking projects, addition of a new vacuum distillation tower and expansion of the coking unit. The “Rewire Alberta” project will eventually raise throughtput to 125,000 bbl/day, and allow Cenovus to displace Saskatchewan heavy oil feedstock with bitumen sourced from Christina Lake and Foster Creek.
The sustaining capital budget was set at about $2.5 billion. The company have several major turnarounds planned for next year, including maintenance work at both Christina Lake and Foster Creek.
Cenovus is now the third largest oil and gas producer in Canada, averaging 805,000 boe/day of total upstream production in the third quarter of this year.
OUR OPERATIONAL PROFICIENCY, DISCIPLINED SPENDING AND ESG LEADERSHIP SETS US APART … BUILDING ON OUR UPSTREAM PRODUCTION STRENGTH IN 2021 AND THE CONTINUED OPTIMIZATION OF OUR BUSINESS, I AM CONFIDENT IN OUR ABILITY TO GROW FREE FUNDS FLOW AND DELIVER SUSTAINABLE, INCREASED RETURNS TO OUR SHAREHOLDERS.
— ALEX POURBAIX, CENOVUS PRESIDENT & CHIEF EXECUTIVE OFFICER
ANOTHER RECORD MONTH FOR THERMAL OUTPUT
According to the Alberta Energy Regulator (AER), thermal output from the oil sands touched another record high in October, averaging 1.576 million bbl/day. Those figures are 81,000 bbl/day higher than the September average, and almost 50,000 bbl/day above the previous record high reached in April 2021.
Cenovus Energy’s Foster Creek and Christina Lake both posted record numbers for the month. Foster Creek reported 209,300 bbl/day on October, better than its rated nameplate capacity of 180,000 bbl/day. Christina Lake produced almost 250,000 bbl/day, slightly below its nameplate of 260,000 bbl/day. Next year’s midpoint production guidance was set at 195,000 and 240,000 bbl/day for Foster Creek and Christina Lake, respectively.
For the first 10 months of this year, Cenovus averaged over 476,000 bbl/day from its four SAGD properties, which now includes both Sunrise and Tucker Lake.
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