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Cenovus Reaffirms Growth Plans, Sees Path to Debt Target by Year-End, RBC Says

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Canada's Cenovus Energy reiterated its growth and capital spending plans during the RBC Global Energy, Power & Infrastructure Conference, highlighting progress across its oil sands, offshore and downstream operations, RBC Capital Markets analysts said in a Wednesday note.

The company remains committed to its 2026 capital budget of $5 billion to $5.3 billion and continues to target approximately 4% organic production growth.

Spending is expected to trend toward the upper end of the range, supported by roughly 100 multilateral wells in the Lloydminster heavy oil region.

Cenovus expects 2027 spending to be similar to 2026 levels and continues to target production of approximately 1.1 million barrels of oil equivalent per day by 2028.

Among its thermal assets, Narrows Lake is producing about 70,000 boe/d, while Foster Creek has improved to 220,000-230,000 boe/d following optimization work.

Sunrise has recently exceeded 70,000 boe/d on certain days and offers significant long-term growth potential.

At Christina North, part of the recently acquired MEG Energy assets, Cenovus has drilled eight to nine redevelopment wells this year and expects production gains within the next few months.

The company is also expanding steam generation capacity and evaluating opportunities to further integrate the Christina Lake assets.

Offshore, drilling has begun at West White Rose, with first oil expected in late September and peak net production targeted at 45,000 boe/d by 2028.

In the US downstream business, Cenovus said it has achieved more than $2.00/bbl in operating cost reductions and is targeting an additional $1/bbl in savings.

Management continues to expect approximately 70% crack-spread capture this year.

Cenovus ended the first quarter with net debt of just over $8 billion and sees a path to reaching its $4 billion target by year-end, which would allow 100% of free cash flow to be returned to shareholders.

The company also said Alberta currently has 100,000 boe/d-150,000 boe/d of spare export capacity and called for policy reforms to support future oil sands growth and pipeline development.

RBC rated Cenovus as "Outperform" and set a price target of 47 Canadian dollars ($33.80) per share.

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