Oil and gas company Cenovus Energy CVE-T beat first-quarter profit estimates on Wednesday due to higher production and refinery throughput, and executives said the start-up of the Trans Mountain pipeline expansion (TMX) would open up new markets.
TMX will nearly triple the flow of oil to Canada’s west coast to 890,000 barrels per day, which is expected to transform access to global markets for the country’s producers. Wednesday marked the commercial start of operations after the project received final regulatory approvals on Tuesday.
“Our teams have been working with buyers, there’s a pretty vast market out there, which is exciting,” Drew Zieglgansberger, chief commercial officer at Cenovus, said on an earnings call, adding the company expected some “bumpiness” in the pipeline’s initial operations.
Calgary-based Cenovus also announced a base dividend increase of 29% as well as a variable dividend of C$0.135 per share.
Analysts described the results as positive, but Cenovus shares were last down 1.6% at C$27.80 on the Toronto Stock Exchange amid a broader slide in Canadian energy stocks.
Cenovus said total upstream production rose nearly 3% to 800,900 barrels of oil equivalent per day (boepd) in the January-March quarter from a year earlier.
Quarterly refining throughput in the quarter hit a record of 655,200 barrels per day (bpd), and U.S. refining operations improved, the company said.
Crude oil prices were range-bound during the quarter, but still remained at a level at which oil and gas companies can produce profitably. Cenovus said WTI crude prices stood at $76.96 per barrel in the first three months of 2024, compared with $76.13 a year earlier.
The company reported a net income of 62 Canadian cents per share in the first quarter, beating analysts’ average estimate of 54 Canadian cents, according to LSEG data.
Higher operating margin and a gain on asset sales also helped boost earnings, Cenovus added.