Cenovus CEO Alex Pourbaix speaks during a news conference in Calgary, on Jan. 30, 2020.Jeff McIntosh/The Canadian Press
Canada’s Cenovus Energy CVE-T on Wednesday reported a more than sevenfold jump in quarterly profit that surpassed analyst estimates and nearly tripled its dividend, as supply concerns boosted crude prices to multiyear highs.
Shares in Calgary-based Cenovus rose 6.1 per cent on the Toronto Stock Exchange to $22.35.
Russia’s invasion of Ukraine has exacerbated concerns about an already-tight global oil market and pushed crude prices to their highest levels in more than a decade. West Texas Intermediate crude, the U.S. benchmark was last trading around US$100.
Cenovus bought rival Husky Energy last year to create Canada’s second-largest oil and gas producer. Upstream production rose to 798,600 barrels of oil equivalent per day, or boepd, in the first quarter, from 769,254 boepd a year earlier.
The company, which reduced its net debt to $8.4-billion as of the end of March, announced plans to return 50 per cent of excess free funds flow to shareholders through buybacks or variable dividends when debt is below $9-billion.
When net debt falls below Cenovus’s target of $4-billion, the company plans to return 100 per cent of excess free funds to shareholders.
“We have built this business with a focus on free funds flow generation and we have made rapid progress on the balance sheet,” Cenovus chief executive Alex Pourbaix said on a conference call.
The company said its base dividend will increase from US$0.14 per share to US$0.42 per share annually, beginning in the second quarter of this year.
Excluding one-time items, Cenovus earned 79 cents per share, beating analysts’ estimates of 71 cents per share, according to IBES data from Refinitiv.
The Calgary Alberta-based company’s net earnings rose to $1.63-billion, or 81 cents per share, for the first-quarter ended March 31, from $220-million, or 10 cents per share, a year earlier.
Cenovus raised its 2022 capital expenditure forecast by $300-million to a range of $2.9-billion to $3.3-billion, to reflect increased costs associated with rebuilding its Superior Refinery in Wisconsin.
The rebuild is now expected to cost about $1.5-billion, up from about $1.2-billion, due to factors including higher labour costs, pandemic-related expenses, inflation and supply chain constraints, the company said.
Cenovus has a number of oil sands facilities and refineries undergoing turnarounds in the second quarter, which will impact production and refining output. However, Mr. Pourbaix said he expects a strong second half of the year once maintenance is finished.
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