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Cenovus Energy Inc. CVE-T lowered its production guidance for the year Wednesday after releasing first-quarter financial results that missed Wall Street’s expectations.

However, outgoing CEO Alex Pourbaix – who will step down from the role later in the day following the company’s annual meeting – suggested the remainder of 2023 looks more promising.

“As the year progresses, we expect improved production and a fully operating downstream business,” Pourbaix said in a news release. “The increase in our base dividend underscores our confidence in the long-term success of the company.”

Cenovus reported a first-quarter profit of $636 million, down from $1.6 billion in the same quarter last year. The profit works out to 32 cents per diluted share, down from 79 cents per diluted share a year earlier.

At the same time, the company said it will now pay a base quarterly dividend of 14 cents per share, up from 10.5 cents.

The increased payment to shareholders came as Cenovus reported a profit of 32 cents per diluted share, down from 79 cents per diluted share a year earlier.

Revenue for the quarter totalled $12.3 billion, down from $16.2 billion in the first three months of 2022.

Cenovus acknowledged Wednesday that its U.S. manufacturing division did not perform to expectations in the first quarter. The company was affected by higher costs associated with the continued commissioning of its Superior Refinery in Wisconsin, which Cenovus acquired as part of its acquisition of Husky Energy in 2021 and is working to re-open. The refinery has been closed since an explosion and fire five years ago.

In addition, Cenovus said it incurred higher costs related to assuming full ownership of the Toledo Refinery following the close of Cenovus’s acquisition from BP, and it also suffered several unplanned outages and severe weather events that affected its U.S. manufacturing division.

“We are actively taking steps to improve performance and expect meaningfully better results through this year and beyond as we start demonstrating the full operating and financial capabilities of our integrated business,” said chief operating officer Jon McKenzie in a news release.

McKenzie is slated to assume the CEO role, replacing Pourbaix, later Wednesday.

Cenovus says upstream production in the first quarter was 779,000 barrels of oil equivalent per day, compared with 798,600 a year earlier, while downstream throughput was 457,900 barrels per day compared with 501,800 in the same quarter last year.

In its guidance for the year, the company says it now expects upstream production for 2023 to be between 790,000 and 810,000 barrels of oil equivalent per day, down from its December prediction for between 800,000 and 840,000. The company also lowered its guidance for downstream throughput to between 580,000 and 610,000 barrels per day compared with earlier expectations for between 610,000 and 660,000, due to a reduction at its U.S. operations.

In a note to clients, Scotiabank analyst Jason Bouvier called Cenovus’ first-quarter results a “modest negative,” pointing out the company’s cash flow per share missed the Wall Street consensus by five per cent.

However, RBC Capital Markets analyst Greg Pardy suggested the weaker quarter was a one-off and not an indication of deeper problems with the company.

“From where we sit, Cenovus Energy’s mixed first-quarter results are not indicative of the company’s execution capability – which should surface in the second half of this year, Pardy said in a note.

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