Canada’s Cenovus Energy is moving to boost production and cut capital expenditure over the next five years, as it aims to grow shareholders returns and reduce its debt.
Cenovus’s strategy through 2024 has seen a reduction in the 2019 capital budget guidance to between C$1.1 billion (US$830 million) and C$1.2 billion.
As capex is cut by C$150 million, the company will look to grow output by 2% to 3% per annum, increasing total volumes to approximately 550,000 barrels of oil equivalent per day by the end of 2024.
Cenovus, which saw strong financial results in the first half of the year driven by higher realised oil prices and Alberta's mandatory production curtailment programme, said it is now in a position to consider potential share repurchases, which could include “the option to participate in a monetisation of Cenovus shares currently owned by ConocoPhillips”.
Meanwhile, the company is also working to address its transportation strategy.
Cenovus has continued to expand its pipeline portfolio and is currently has a combined firm pipeline capacity to the US Gulf Coast, the US Midwest and the Canadian West Coast of more than 133,000 barrels per day.
In addition, the company has committed capacity to ship another 275,000 bpd to the US Gulf Coast and Canadian West Coast on expansion pipeline projects currently under development.
Cenovus is also working to ramp up its crude-by-rail capacity to approximately 100,000 bpd by the end of 2019 to bridge the gap until expansion pipelines are completed.
However, the company is now exploring the potential to build a diluent recovery unit (DRU) at its Bruderheim transloading terminal in Alberta, potentially allowing crude by rail to become a more permanent structural component of the company’s transportation strategy.
The decision to proceed with a DRU will depend on whether currently planned expansion pipeline projects are delayed further, Cenovus said.