Cenovus' quarterly profit drops due to weak oil prices
Cenovus, a Canadian oil and natural gas company, reported a decline in profit for the fourth quarter on Thursday. Lower commodity prices and lower refining margins were offset by higher production.
In mid-morning trade, the company's stock was down by 4.5%.
The average Brent crude futures fell 3% in 2024 as the economy of the major consumer, China, remained weak. The OPEC+ producer's group also postponed their planned supply increases to 2026 and extended the deep cuts in output until the end of the year.
Cenovus revenues were negatively affected by the decline in oil prices over the past year, despite reaching a record quarterly production of 628.500 barrels equivalent to oil per day (boepd).
Cenovus's results reflect the general weakness of the North American refining industry. Exxon, Chevron and other integrated oil companies have seen their profitability drop in the refining segment after a period when margins were at record levels due to sanctions imposed on Russia for its invasion of Ukraine.
Cenovus's U.S. refinery revenues fell to $6.6 billion during the fourth quarter, compared to the $7.2 billion reported in the previous quarter. The company's refining market share was negatively affected by the turnaround work required at its Lima refinery in Ohio, as well as the narrowing of heavy crude oil differentials.
Jefferies, an investment bank, said in a Thursday note that Cenovus’s soft results were to be expected but investors wanted improvement.
The bank stated that investors will be looking for signs on the call to indicate that U.S. refinery has bottomed out and is improving.
Cenovus reported that its total upstream output increased slightly, to 816,000 bpd during the third quarter. This compares with 808,600 bpd one year ago.
The fourth quarter total refining output was 666.700 barrels per day. This compares to 579.100 bbl a year earlier.
Energy sector in Canada faces a bleak future after U.S. president Donald Trump delayed the 25% tariffs imposed on Canadian imports by one month.
According to the Energy Information Administration, Canada is the largest source of U.S. crude oil imports and will supply more than half the total imports in 2023.
Cenovus forecasted an upstream production between 805,000 to 845,000 boepd in the current year. This is more than its 797,200 Boepd produced in 2024.
The Calgary-based company saw its net income fall to C$146.78 million ($102.78) or 7 Canadian Cents per share in the three months ending December 31 from C$743.78 million or 32 Canadian Cents per share a year ago. (1 Canadian dollar = 1.4205 Canadian Dollars) (Reporting from Amanda Stephenson, Calgary; editing by Andrea Ricci).
(source: Reuters)
