Back to top

Image: Bigstock

Cenovus (CVE) Lags Q2 Earnings Estimates, Beats on Revenues

Read MoreHide Full Article

Cenovus Energy Inc. (CVE - Free Report) reported second-quarter 2019 earnings per share of 16 cents, missing the Zacks Consensus Estimate of 23 cents. In the prior-year quarter, the company had incurred a loss of 19 cents.

Meanwhile, quarterly revenues of $4,431 million surpassed the Zacks Consensus Estimate of $4,383 million but declined from the year-ago figure of $4,671 million.

The leading integrated energy firm’s higher year-over-year earnings were supported by increased average realized crude prices. This was however partially offset by lower production volumes, reduced contributions from the Deep Basin business unit and unplanned maintenance activities at refineries.

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 revenues from the Oil Sands unit declined to C$2,716 million from C$3,069 million in second-quarter 2018, courtesy of lower production of oil sands due to Alberta government’s mandated production curtailment program. In the June quarter of 2019, the company recorded daily oil sand production of 344,973 barrels, down 11.4% year over year.

However, operating margin at the segment surged to C$1,049 million from the year-ago quarter’s C$476 million, thanks to higher Western Canadian Select price of C$65.80 per barrel compared with C$62.75 in the year-ago period. Moreover, its low-cost structure and capital discipline supported the performance.

Revenues from the Deep Basin unit fell to C$140 million from C$225 million in the year-ago quarter. Moreover, the segment’s operating margin came in at C$30 million, down from C$78 million in the year-ago quarter. Higher operating costs per barrel and lower sales volumes affected the segment.

At the Refining and Marketing segment, the company generated revenues worth C$2,849 million, up from C$2,777 million a year ago. The unit’s operating margin was recorded at C$198 million compared with the year-ago level of C$357 million, primarily due to increased operating costs, and unplanned maintenance activities at both Wood River and Borger refineries.

Expenses

Transportation and blending expenses in the reported quarter fell to C$1,354 million from C$1,665 million in the year-ago period. Operating expenses also declined to C$530 million from the year-ago level of $535 million. However, expenses for purchased products rose to C$2,381 million from C$2,024 million in second-quarter 2018.

Capital Expenditures & Balance Sheet

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

Notably, Cenovus generated $834 million in free funds flow, which was used to reduce net debt. As of Jun 30, 2019, the Canadian energy player had cash and cash equivalents of C$64 million, and total long-term debt of C$7,152 million. Its total debt-to-capitalization ratio was approximately 27.3%.

Guidance

Through third-quarter 2019, the company expects average bitumen and oil output to reach a maximum limit of 360,000 barrels. For full-year 2019, the company expects total oil sands daily production within 350-370 thousand barrels of oil equivalent per day.

Zacks Rank and Stocks to Consider

Currently, Cenovus has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy sector are given below:

MPLX LP (MPLX - Free Report) provides midstream infrastructures to upstream companies. Its bottom line in 2019 is expected to improve 23.6% from a year ago. The company has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

World Fuel Services Corporation engages in the distribution of fuel and related products for different industries all over the world. Its bottom line in 2019 is expected to improve 11.9% from a year ago. The company has a Zacks Rank #1.

Holly Energy Partners, L.P. is a midstream energy firm. Its bottom line in 2019 is expected to improve 8.8% from a year ago. The company has a Zacks Rank #2 (Buy).

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +98%, +119% and +164% in as little as 1 month. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Cenovus Energy Inc (CVE) - free report >>

MPLX LP (MPLX) - free report >>

Published in