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Cenovus Energy (CVE) Q4 Earnings Lag, '21 Capital Budget Set

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Cenovus Energy Inc. (CVE - Free Report) reported fourth-quarter 2020 loss per share of 35 cents, wider than the Zacks Consensus Estimate of a loss of 6 cents and the year-ago loss of 10 cents.

Revenues of $2,739 million declined from the year-ago $3,665 million.

The leading energy firm’s quarterly results were weak due to lower contributions from oil sands operations, partially offset by a decline in transportation and blending expenses. Notably, a weak pricing environment of commodities owing to the coronavirus pandemic hurt the company’s bottom line.

Cenovus Energy Inc Price, Consensus and EPS Surprise


Cenovus Energy Inc Price, Consensus and EPS Surprise

Cenovus Energy Inc price-consensus-eps-surprise-chart | Cenovus Energy Inc Quote

Operational Performance

Quarterly gross revenues from the Oil Sands unit fell to C$2,227 million from C$2,659 million in fourth-quarter 2019. In the December quarter, the company recorded daily oil sand production of 380,693 barrels, up 2% year over year.

Notably, the segment’s operating income was C$205 million, down from C$250 million a year ago.

Gross revenues at the Conventional unit were C$184 million, down from C$190 million in the year-ago quarter. In the December quarter, the company recorded daily liquids production of 24,587 barrels, down 6% year over year.

The segment’s operating loss came in at C$292 million versus the loss of C$55 million in the year-ago quarter.

The Refining and Marketing segment generated gross revenues of C$1,345 million, down from C$2,555 million a year ago. Moreover, the unit’s operating loss was C$139 million against a profit of C$42 million a year ago.


Transportation and blending expenses in the reported quarter contracted to C$1,137 million from C$1,416 million a year ago. Moreover, expenses for purchased products fell to C$1,145 million from C$2,034 million in the prior-year quarter. Operating costs in the quarter were C$485 million, down from the year-ago level of C$514 million.

Capital Expenditures & Balance Sheet

The company incurred total capital expenditure of C$250 million in the quarter under review.

As of Dec 31, 2020, the Canadian energy player had cash and cash equivalents of C$378 million. Total long-term debt was C$7,441 million. Its total debt to capitalization was 31.2%.

2021 Guidance

On Jan 28, the company announced projection for oil sands production in 2021 in the band of 524 thousand barrel per day (MBbl/D) to 586 MBbl/D. For oil sands business, the company plans capital expenditure of C$850 million to C$950 million.

The company sets C$1,220 million to C$1,410 million of capital spending budget for upstream business in 2021. For downstream operations, the company’s capital budget lies in the band of C$1,000 million to C$1,200 million.

Zacks Rank & Key Picks

Cenovus Energy currently carries a Zacks Rank #3 (Hold). Meanwhile, some better-ranked players in the energy space include Matador Resources Company (MTDR - Free Report) , Pioneer Natural Resources Company (PXD - Free Report) and Diamondback Energy, Inc. (FANG - Free Report) . While Diamondback carries a Zacks Rank #2 (Buy), Matador and Pioneer Natural sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Matador is likely to see earnings growth of 201.3% in 2021.

Pioneer Natural has seen upward estimate revisions for 2021 earnings in the past 30 days.

Diamondback is likely to see earnings growth of 55% in 2021.

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