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Cenovus Energy Inc T.CVE

Alternate Symbol(s):  CVE | CVE.WS | T.CVE.WT | T.CVE.PR.A | CNVEF | T.CVE.PR.B | T.CVE.PR.C | T.CVE.PR.E | T.CVE.PR.G

Cenovus Energy Inc. is a Canada-based integrated energy company. The Company has oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States. The Company's segments include Upstream, Downstream, and Corporate and Eliminations. Its Upstream segment includes Oil Sands, Conventional, and Offshore. Its Downstream segment consists of Canadian Manufacturing, and United States Manufacturing. The Company's upstream operations include oil sands projects in northern Alberta, thermal and conventional crude oil, natural gas and natural gas liquids (NGLs) projects across Western Canada, crude oil production offshore Newfoundland and Labrador and natural gas and NGLs production offshore China and Indonesia. The Company's downstream operations include upgrading and refining operations in Canada and the United States, and commercial fuel operations across Canada.


TSX:CVE - Post by User

Post by retiredcfon Nov 02, 2023 10:40am
312 Views
Post# 35713436

CIBC

CIBCCurrently have a $32.00 target. GLTA

EQUITY RESEARCH
November 2, 2023 Flash Research
CENOVUS ENERGY INC

First Look Q3/23: Adjusted FFO Ahead Of Our Expectations
And Consensus
 
Cenovus reported Q3/23 results which were ahead of our expectations and
consensus on adjusted FFO per share. Variances to our estimates stemmed
primarily from stronger-than-expected realizations in the oil sands business
unit. Key takeaways from the quarter include a strong FIFO-LIFO contribution
to downstream margins of ~$400 million, first production from the MAC field
in Indonesia, strong throughput on downstream operations with stable
runtime on the FCC Unit at Superior achieved in early-October, and $600
million of partial payment towards the common share warrant obligation.
 
Financial And Operating Takeaways:
Q3/23 results. Production of 797 MBoe/d (78% liquids) was in line with our
estimate of ~792 MBoe/d (82% liquids) and consensus of 790 MBoe/d (range
of 787 MBoe/d to 794 MBoe/d). Adjusted FFO per share of $1.81 was ~10%
above our estimate of $1.64 and consensus of $1.63 (range of $1.50 to
$1.73). Capex of $1,025 million was in line with our estimate of $1,050 million
and consensus of $1,099 million (range of $1,051 million to $1,213 million).
Shareholder returns. The company delivered $600 million to shareholders
through partial payment of the common share warrants obligation, $361
million through its NCIB (13.8 million shares), and $264 million through
common share base dividend. The current NCIB expires on November 8,
2023 and the company plans to apply for approval to repurchase ~133
million shares in the upcoming application. The company exited the quarter
with ~$6 billion in net debt and currently returns 50% of excess free funds
flow to shareholders.
 
Downstream operational update. Downstream reported throughput of ~664
MBbl/d, below our estimate of ~690 MBbl/d. U.S Manufacturing utilization
was 88% (70% in Q2/23) as the Toledo Refinery performed well following the
Q2/23 restart while the Superior Refinery achieved full and stable start-up of
the FCC unit in early October. Canadian Manufacturing utilization was 98%
(86% in Q2/23) while the Lloyd Upgrader and Refinery operated at or near
full capacity, with utilization rates of 99% and 96%, respectively.
 
Valuation. Cenovus trades at a P/RNAV ratio of 88%, a 2024E EV/DACF of
4.4x and a 2024E FCF yield of 15%, vs. the large-cap group at 95%, 5.0x
and 14%, respectively.

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