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Cenovus Energy (CVE) Posts Loss in Q2, Revenues Top Estimates

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Cenovus Energy Inc. (CVE - Free Report) reported second-quarter 2018 loss per share of 19 cents against the Zacks Consensus Estimate of break-even earnings. In the prior-year quarter, the company had reported profit of 27 cents a share. Escalated transportation and blending expenses and takeaway constraint capacity of the pipeline networks have hurt the bottom line.

Meanwhile, quarterly revenues of $4,671 million surpassed the Zacks Consensus Estimate of $4,252 million and improved from the year-ago quarter’s $3,034 million. The increase in refinery utilizations along with higher oil sands production drove the top line. 

Operational Performance

Oil Sands: Quarterly revenues at the unit surged to C$3,069 million from C$1,630 million in the second quarter of 2017, courtesy of higher production of oil sands. Cenovus recorded daily oil sand production of 390,000 barrels in the April-to-June quarter of 2018, up 49% year over year.

However, the segment’s operating margin was C$476 million, lower than C$501 million in the year-ago quarter, owing to a surge in transportation and blending expenses. 

Deep Basin: Revenues at the business unit jumped to C$225 million from C$116 million. Moreover, the segment’s operating margin came in at C$78 million, up from C$51 million a year ago.

Production from new wells primarily supported the business. However, the transportation constraint capacity of the pipeline networks limited the upside in production.

Refining and Marketing: Through this segment, the company generated C$2,777 million of revenues, higher than C$2,397 million in the year-ago quarter. Also, the unit’s operating margin skyrocketed from C$20 million to C$357 million.

Increased utilizations along with the year-over-year higher crack spreads resulted in the outperformance.


Transportation and blending expenses in the reported quarter rose to C$1,665 million from C$887 million in the year-ago quarter. 

Balance Sheet & Capital Expenditures

As of Jun 30, 2018, the Canadian energy player had cash and cash equivalents of C$376 million and total long-term debt of C$9,992 million. The total debt-to-capitalization ratio was approximately 34.5%. The company incurred capital expenditure of C$294 million in the quarter under review.


Cenovus paid C$122 million to shareholders as dividend over the first six months of 2018, higher than C$102 million a year ago.


Through 2018, the company expects total oil equivalent daily production between 483 MBOE/D and 510 MBOE/D. For the upstream activities, Cenovus is planning to spend C$1,215 million to C$1,350 million.

For refining operations, the company will likely invest C$180 million to C$200 million.

Cenovus Energy Inc Price, Consensus and EPS Surprise


Cenovus Energy Inc Price, Consensus and EPS Surprise | Cenovus Energy Inc Quote

Zacks Rank & Stocks to Consider

Cenovus carries a Zacks Rank #3 (Hold). A few better-ranked players in the energy space are Northern Oil and Gas, Inc. (NOG - Free Report) , McDermott International, Inc. (MDR - Free Report) and Murphy Oil Corp. (MUR - Free Report) . While Murphy Oil carries a Zacks Rank #2 (Buy), McDermott and Northern Oil sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here  

Northern Oil beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive earnings surprise being 160.4%.

McDermott’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 73.6%.

Murphy Oil’s bottom line surpassed the consensus mark in each of the last four quarters, the average positive surprise being 102.5%.

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