Cenovus Energy Inc. Q2 FY2025 earnings call

• Health & Safety: Acknowledgment of Caribou Lake wildfire response where over 2,000 workers were evacuated, facility shut down orderly, then safely ramped back up to 250,000 bbl/day.
• Upstream: Completed turnarounds at Foster Creek and Sunrise ahead of schedule, Christina Lake production recovered, Narrows Lake tied back with first oil, West White Rose project advanced, Foster Creek added steam generators, and addressed Rush Lake casing failure incident.
• Downstream: Strong second quarter results, end of heavy maintenance period with nearly $900 million in turnaround costs expensed over 6 quarters, Canadian and U.S. refining performing well.

Upstream: Production was 766,000 BOE per day. Key activities included turnarounds at Foster Creek and Sunrise, Christina Lake production recovery (218,000 bbl/day in Q2, averaged over 250,000 bbl/day in July), Narrows Lake tieback with first oil in July, West White Rose project progress (CGS placed, topsides set, hookup/commissioning begun), Foster Creek tying in 4 new steam generators, and Rush Lake incident with casing failure leading to production removal from guidance. Downstream: Generated about $220 million in operating margin excluding inventory and turnaround costs. Canadian refining had 112,000 bbl/day crude throughput at 104% utilization. U.S. refining had 553,000 bbl/day crude throughput with Toledo turnaround completed 11 days ahead of schedule.

• Capital investment in 2026 expected to be lower than previous years, targeting ~$4 billion.
• 2026 upstream capital in Lloyd area expected to be $150-200 million for growth to ~40,000 bbl/day at $45 oil price.
• West White Rose project to flip from cash consumption to generation, with full production in 2028-2029 generating ~$800 million free cash flow at $60 WTI, $63 Brent.

• Rush Lake Incident: Casing failure led to steam release, resulting in shutdown of Rush Lake facilities and removal of Rush Lake volumes from production guidance for remainder of year. Ongoing investigation and need for safe restart plan.

Q: Menno Hulshof asks about status of U.S. PADD 2 operated refineries and Q3 utilization.

A: Jonathan McKenzie states refineries are operating as expected, out of turnaround at Toledo, with major maintenance cycle behind and looking forward to stronger operations.

Q: Dennis Fong asks about U.S. downstream turnarounds and incremental confidence.

A: Jonathan McKenzie discusses findings from turnarounds showing minimal fund work needed, boosting confidence in continued reliable operations.

Q: Greg Pardy asks about Liwan and Indonesia assets.

A: Jonathan McKenzie explains they are non-oil price driven, generate significant free cash flow with good fiscal terms, and focus on harvesting cash and optimizing contracts.

Q: Neil Mehta asks about West White Rose gating items and free cash flow.

A: Jonathan McKenzie states gating item is hooking up topsides to CGS, with project flipping from cash consumption to generation at $60 WTI, $63 Brent full production.

Q: Patrick O'Rourke asks about U.S. downstream operating costs and margin drivers.

A: Jonathan McKenzie discusses drivers like crude slate, product placement, and unit cost reduction, expecting continued margin capture and unit cost improvement while prioritizing reliability.

Q: Manav Gupta asks about fire impact on volumes and heavy-light differential outlook.

A: Jonathan McKenzie states ~2 million barrels lost due to Christina Lake fire, and Geoffrey Murray discusses U.S. Gulf Coast and Alberta differentials outlook.

Q: Unidentified Analyst asks about Ottawa policy impact.

A: Jeffery Lawson discusses positive impact on M&A and investment due to improved regulatory environment and competitiveness.