logo-loader

Cenovus swings to Q4 loss on impariment charge, boosts dividend

Last updated: 15:57 14 Feb 2013 GMT, First published: 16:57 14 Feb 2013 GMT

no_picture_pai

 

Cenovus Energy (TSE:CVE) (NYSE: CVE) Thursday said it swung to a loss in its fourth quarter as it took a hefty impairment charge related to its Suffield assets in Alberta and said it expects declines in future natural gas prices.

Canada's number two oil producer also said that constraints on market access are having a negative impact on realized pricing for Canadian oil producers. 

Congestion on pipelines linking oil fields in Western Canada to U.S. markets contributed to a widening of the average light/heavy differential between WTI and WCS, which on average was US$30.37 per barrel (bbl) in December 2012 compared to $11.72/bbl in the same period a year earlier.

Shares of the company slid 2.7 per cent as at about 12 p.m. EDT, trading at $31.72.

For the quarter, Cenovus reported a net loss of C$118 million or 16 cents per share, compared with a profit of $266 million or 35 cents per share, in the year-ago period.

The latest quarter included a one-time goodwill impairment charge of $393 million tied to its Suffield assets in southeast Alberta. 

Operating loss, which excludes most one-time and unusual items, was $189 million or 25 cents per share. 

Cash flow, an important gauge of performance in the industry, fell 18 per cent to $697 million or 92 cents per share, compared to $851 million, or $1.12 per share, a year earlier. 

Total oil production in the quarter rose 23 per cent to 177,646 barrels of oil per day. 

The company said its Christina Lake oil sands project led the growth in production, nearly tripling its average daily output from the year-ago quarter at 42,000 bbls/d net. The substantial increase in production at Christina Lake was due to the ramp-up of two new expansion phases, it added.

Meanwhile, Foster Creek output averaged about 59,000 bbls/d net to Cenovus, while production at its conventional oil Pelican Lake operations was flat at 24,000 bbls/d.

At Cenovus's U.S. refineries, strong margins and increased heavy oil processing capacity led to a 29-per-cent increase in operating cash flow from refining, it said.

Natural gas production fell 14 per cent in the quarter, to 556 million cubic feet per day (MMcf/d). The production drop was driven primarily by expected natural declines and the divestiture of a non-core property early in the first quarter of 2012, the company said.

“We had another strong year in 2012, achieving the milestones we set for ourselves," said president and CEO Brian Ferguson. 

"We added significant new reserves and resources, increased our oil production, enhanced our net asset value and generated record cash flow.”

Cenovus posted an average realized price, including hedging, of $67.16/bbl for its oil in 2012, compared with $69.99/bbl during 2011. The average realized price, including hedging, for natural gas in 2012 was $3.56/Mcf, compared with $4.52/Mcf a year earlier.

According to the company's independent reserves and contingent resources evaluation, total proved reserves were nearly 2.2 billion bbls of oil equivalent at the end of 2012, up 12 per cent from the previous year.

Cenovus said its board has approved a 10 per cent increase in the first quarter 2013 dividend to 24.2 cents per share, payable on March 28, to shareholders of record as of March 15. 

 

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

1 hour, 33 minutes ago