Cenovus Updates on Q2 2021 Results
Cenovus Energy Inc. continues to demonstrate the strengths of the company’s integrated portfolio in its second quarter results, generating cash from operating activities of $1.4 billion, adjusted funds flow of $1.8 billion and free funds flow of $1.3 billion, supporting a reduction in net debt of nearly $1 billion since March 31, 2021.
Total production of nearly 770,000 barrels of oil equivalent per day (BOE/d) despite planned turnarounds at several assets, and strong realized commodity prices in the upstream business along with continued recovery of demand for U.S. downstream products drove Cenovus’s strong financial performance, which the company expects will continue through the rest of the year.
Second quarter highlights
• Generated cash from operating activities of $1.4 billion, adjusted funds flow of $1.8 billion and free funds flow of $1.3 billion.
• Increasing production guidance for 2021 by 2% with total capital guidance unchanged.
• On track to achieve $1.2 billion of run-rate synergies and net debt of $10 billion by end of 2021.
Cenovus generated net earnings of $224 million in the second quarter compared with a net loss of $235 million in the same period of 2020. The improvement in net earnings was driven by higher operating margin, partially offset by higher unrealized risk management losses and integration costs.
The company recorded a realized loss on risk management of $199 million in the second quarter of 2021, primarily related to inventory risk management which was offset by higher revenues from the physical sales. Risk management gains and losses are a result of both inventory risk management and corporate hedging. Inventory risk management is undertaken to ensure that as decisions are made to transport or store barrels, the margin on this transaction is captured.
“Our results underscore the earnings power of the combined company as we further integrate and deliver on our expanded asset base,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “We posted a strong second quarter and expect to accelerate deleveraging in the second half of this year.”
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