Skip to main content

Pipes carry steam to well heads at Cenovus Energy’s oil sands operation in Christina Lake, Alta.

Richard Perry/The New York Times

One-time expenses cut profit and cash flow at Cenovus Energy Inc., even as oil production ramped up at the Canadian energy giant.

Cenovus saw a 10-per-cent drop in its operating profit compared with the same quarter in 2012, and a 6-per-cent drop in its cash flow. It earned $179-million, or 24 cents a share diluted in the second quarter, down from $397-million or 52 cents, in the same period the previous year.

While the company's shares had been riding high for the past few weeks on improved oil prices, the stock dropped more than 5 per cent Wednesday on the Toronto Stock Exchange after its results were released.

Story continues below advertisement

The results were surprising, given the 10-per-cent rise in total oil production and the narrowing of the price gap between Western Canadian Select (WCS) and West Texas intermediate (WTI). Although the Calgary-based company benefited from higher prices for its crude, its Wood River Refinery in Illinois and Borger Refinery in Texas, which it co-owns with operator Phillips 66, faced higher costs for feedstock.

Cenovus chief financial officer Ivor Ruste said while the tighter differential helped boost Cenovus profit on the production side, "this also had a negative impact on our refining results, as heavy oil feedstock was more expensive and contributed to lower refining margins."

Operating costs rose slightly at the company's Foster Creek and Christina Lake oil sands mines as well as at its conventional Pelican Lake site, and electricity costs increased across the company's operations.

Mr. Ruste said operating profit came in below consensus expectations mainly as a result of three factors: The $63-million pre-exploration expense for a conventional oil opportunity, a $57-million impairment from the sale of a Shaunavon asset, and a $46-million exploration expense on a tight oil play in Saskatchewan.

The company would not provide any further details on the one-time costs, but Cenovus chief executive officer Brian Ferguson said the company has taken "a conservative approach and we have taken the full charge in the quarter – and there are no more charges to come."

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies