Cenovus Energy Inc. ( CVE Quick Quote CVE - Free Report) announced that it will increase production by more than 3% in 2023 for continued growth in shareholder returns.
The production growth comes amid weakening crude prices despite the ongoing energy supply concerns due to Russia’s aggressive invasion of Ukraine.
For 2023, the company expects total upstream production of 800,000-840,000 barrels of oil equivalent per day (Boe/d). Cenovus expects total downstream crude throughput of 610,000-660,000 barrels per day (bpd), up 28% year over year.
Oil-sand production is projected to be 582,000-642,000 bpd, while conventional oil production is expected to be125,000-140,000 Boe/d. The company anticipates its natural gas business to increase by as much as 25% in the coming years due to higher prices.
Cenovus announced that it would increase its capital budget by about 21% year over year to $4-$4.5 billion. Of the total, the company will spend $1.2-$1.7 billion for optimization and growth. This involves the restart of the West White Rose project in offshore Newfoundland, optimizing oil-sand assets and improving reliability in its downstream business.
While Canada-based producers continue to raise dividends and share buybacks, the oil and gas sector is increasingly facing pressure to decarbonize operations. Cenovus will spend approximately $30 million next year to reduce methane emissions and carbon capture and storage in its conventional assets. Cenovus plans to spend $1 billion over the next five years on projects to reduce absolute scope 1 and 2 emissions by 35% by 2035-end compared with 2019 levels.
Cenovus expects to achieve its debt-reduction target of C$4 billion next year, upon which it will return 100% of excess free funds flow to shareholders.
Shares of Cenovus have underperformed the
industry in the past month. The stock has lost 13.6% compared with the industry’s 12.1% growth. Image Source: Zacks Investment Research Zacks Rank & Stocks to Consider
Cenovus currently carries a Zack Rank #3 (Hold).
Investors interested in the
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