Cenovus expects widening Canadian crude discount to be temporary; won't change output plans

Cenovus Energy said it will not change its output plans in response to the unexpectedly wide discount on Western Canadian crude, which it expects to be temporary. Western Canada Select was trading more than US$30 a barrel below WTI as of Monday, its widest spread since 2018. CEO Jon McKenzie said the current weakness reflects global factors, including high freight rates that have cut export demand, rather than a lack of Canadian pipeline capacity. He said the company does not know when the situation will normalize.

Cenovus produced a record 1.024 million barrels of oil equivalent per day in the third quarter, up from 832,900 a year earlier, with quarterly records at its Christina Lake, Foster Creek and Sunrise projects. Net income rose to C$3.36 billion, or C$1.83 per share, from C$1.29 billion, or 72 Canadian cents per share. Its adjusted refining margin increased to C$55.52 per barrel from C$29.83 in the preceding quarter.

In October, Cenovus agreed to acquire Athabasca Oil in a C$5.7 billion cash-and-stock deal expected to close in December, adding about 45,000 barrels of oil equivalent per day to its thermal oil sands production. Third-quarter refinery crude processing fell to 437,200 barrels per day from 710,700 a year earlier, as a planned turnaround at its Lima refinery weighed on US throughput.