Cenovus Energy Inc. saw its profits surge in the third quarter as the Calgary based oil company overcame a number of challenges that had plagued it earlier in the year.
Cenovus said Thursday it earned a third-quarter profit of $1.86 billion, a 16 per cent increase from the $1.61 billion it earned in the same quarter last year.
It was also a 115 per cent increase from the $866 million it earned in the second quarter of this year — a dramatic quarter-to-quarter increase that CEO Jon McKenzie attributed to a number of positive developments.
While Cenovus benefited in the third quarter from higher commodity prices, it also saw its upstream production in the quarter increase by nine per cent from the second quarter to 797,000 barrels of oil equivalent per day.
Much of that increase was due to the restart of conventional drilling that had been offline in the second quarter due to wildfires in Alberta.
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The company also saw its U.S. refinery utilization increase to 88 per cent in the third quarter, compared with 70 per cent in the second quarter. U.S. refinery throughput was 555,900 barrels per day, compared to 442,500 barrels per day in the second quarter.
The gains reflect the full operation of Cenovus’ Toledo refinery after a second-quarter restart, as well as the full and stable startup of its Superior refinery in early October.
Both of those U.S. refineries have caused headaches for Cenovus over the past year. The company has incurred costs associated with the commissioning and restart of the Superior refinery, which has been closed since an explosion and fire five years ago. Cenovus acquired the refinery as part of its acquisition of Husky Energy in 2021.
The Toledo refinery, which Cenovus acquired from BP, suffered several unplanned outages and severe weather events last winter.
Cenovus had previously forecast that its profitability would improve in the last half of this year as those refineries came back online, and McKenzie said the company will continue to focus on “grinding out value” from these assets in the coming years.
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One of the company’s goals is to continue reducing operating expenses at its U.S. refineries.
“Refining is a core part of our business,” McKenzie told analysts on a conference call.
“Our goal is to be as good at running the downstream as we are at running our thermal assets. It’s not necessarily going to happen overnight, but that’s the trajectory we’re on.”
Eight Capital analyst Phil Skolnick called Cenovus’ third-quarter results “positive,” adding the company has turned its fortunes around as expected.
“Q3 results confirmed our thesis that (the second half of 2023) will show a major recovery in cash flow and free cash flow generation,” Skolnick wrote in a note.
Cenovus also announced on Thursday the appointment of former Shell Canada president and country chair Michael Crothers and former Husky Energy executive James Girgulis to the company’s board of directors, effective immediately.
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