Canada’s Cenovus Energy Inc CVE-T posted a quarterly loss on Tuesday primarily due to non-cash impairment of $1.9-billion in the U.S. manufacturing segment, sending its shares lower.
The U.S. manufacturing business was hit by operational issues at two refineries, contributing to a net loss of $408-million, or 21 cents, for the fourth-quarter ended Dec. 31, compared with a loss of $153-million, or 12 cents per share, a year earlier.
Despite the quarterly loss, which comes amid a surge in global oil prices to seven-year highs, Cenovus expects to rapidly reduce its net debt to $8-billion and will soon share plans on increasing returns to shareholders, executives said on a conference call.
Cenovus’s net debt was below $9.6-billion at year end 2021.
The company is also in preliminary discussions with Phillips 66 about the future of their 50-50 joint venture ownership of the Wood River, Illinois, and Borger, Texas, refineries in the U.S., said Cenovus chief executive Alex Pourbaix.
“When we’re involved in refineries that are great refineries we would love to have 100 per cent of it, all things being equal,” Pourbaix said, adding there was no urgency and it was too early to speculate on what an alternative to the joint venture could look like.
Cenovus, which agreed to buy rival Husky last year to create Canada’s No. 3 oil and gas producer, said total production stood at 825,300 barrels of oil equivalent per day (boepd) in the quarter, up from 467,202 boepd a year earlier.
Downstream throughput, or the amount of crude processed, rose 469,900 barrels per day (bpd) from 169,000 bpd.
Editor’s note: (Feb. 8, 2022): This story has been updated to correct the net operating loss to $97-million, not $9-million, and consensus estimates in paragraph three.
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