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Cenovus (CVE) Gives Production Guidance for 2023, Hikes Capex

Cenovus Energy Inc. CVE 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.

Price Performance

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.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Stocks to Consider

Cenovus currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MPLX LP MPLX is a master limited partnership that provides a wide range of midstream energy services, including fuel distribution solutions. MPLX’s third-quarter earnings of 96 cents per unit beat the Zacks Consensus Estimate of 81 cents.

MPLX is expected to see an earnings rise of 29.7% in 2022. MPLX’s distribution per unit was 77.5 cents for the third quarter, indicating a 10% hike from the prior distribution of 70.5 cents. The distribution will be paid out on Nov 22, 2022, to common unitholders of record as of Nov 15, 2022.

Phillips 66 PSX is the leading player in each of its operations, like refining, chemicals and midstream, in terms of size, efficiency and strengths. PSX’s third-quarter 2022 adjusted earnings per share of $6.46 beat the Zacks Consensus Estimate of $4.98.

Phillips 66 is expected to see an earnings rise of 255.6% in 2022. Phillips 66’s board of directors authorized a $5-billion increase to its stock repurchase program, bringing the total share repurchases authorized since 2012 to $20 billion. This represents Phillips 66’s strong focus on returning capital to stockholders.

Marathon Petroleum Corporation MPC is a leading independent refiner, transporter and marketer of petroleum products. MPC’s third-quarter 2022 adjusted earnings per share of $7.81 beat the Zacks Consensus Estimate of $6.80.

Marathon Petroleum is expected to see an earnings rise of 940.8% in 2022. In October, Marathon Petroleum completed its target to buy back $15 billion in common stock. MPC has a remaining authorization of $5 billion with no expiration date.

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