FINWIRES · TerminalLIVE
FINWIRES

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

By

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.

Related Articles

Commodities

US Natural Gas Update: Futures Rise on Weather and Small Inventory Build Expectation

US natural gas futures maintained earlier gains in after-hours trading on Wednesday as forecasts turned warmer and traders positioned ahead of a government storage report expected to show a smaller-than-normal inventory build.The front-month Henry Hub contract and the continuous contract both rose 2.78% to $3.255 per million British thermal units.Weather forecasts provided the primary catalyst for gains. The Commodity Weather Group said US forecasts shifted hotter, with above-normal temperatures expected across the Mid-Atlantic, Midwest, and Interior West through Jun. 12, according to Barchart.The 1-15 day outlook added 5.6 degrees Fahrenheit to the Lower 48 forecast, keeping demand more firmly oriented toward cooling-season strength, Gelber & Associates said in a Wednesday note, adding that power-sector demand remains the clearest bullish driver as the market looks toward mid-June.Total lower-48 natural gas demand was estimated at 68.7 Bcf/d on Wednesday, down 0.6 Bcf/d from the previous day but up 1.5% from a year earlier. Celsius Energy said power burn late Wednesday reached 24.1 Bcf/d, up 0.5 Bcf/d from Tuesday.Longer-term support came from The Edison Electric Institute, which reported that US Lower-48 electricity generation rose 6.4% year over year to 81,619 gigawatt-hours in the week ended May 30. For the year ended May 30, power output increased 2.18% from a year earlier to 4.34 million GWh, it said.Market attention is now turning to Thursday's Energy Information Administration storage report. Gelber & Associates estimates a 95-Bcf injection for the week ended May 30, below both the 122-Bcf build recorded during the comparable week last year and the five-year average increase of 101 Bcf."A 95-Bcf injection would be materially tighter than both last year and the seasonal norm, but still large enough to remind the market that storage remains comfortable unless heat strengthens further or LNG demand rebounds more convincingly," the firm said.Other analyst estimates for the report are as high as 99 Bcf.Barchart, citing BNEF data, reported that Lower-48 dry gas production rose to 109.6 Bcf/d on Wednesday, up 0.5 Bcf/d from Tuesday and 3.2% higher than a year ago.Meanwhile, LNG gas export demand remained constrained by ongoing maintenance at export facilities. LNG feedgas flows totaled 17.0 Bcf/d on Wednesday, up 0.1 Bcf/d from the previous day but down 6.6% from a week earlier.

Commodities

OPAL Fuels, GFL Advance 2 RNG Projects

Opal Fuels (OPAL) and GFL Environmental (GFL) are advancing two renewable natural gas projects in Alabama and Georgia with a combined design capacity of almost 2 trillion British thermal units, the companies said Wednesday.The partners are building the facilities at the Stones Throw Landfill in Alabama's Tallapoosa County and the Grady Road Landfill in Georgia's Polk County, with each company holding a 50% ownership stake.Under the agreement, Opal Fuels will market and distribute all renewable natural gas produced by the facilities through its expanding compressed natural gas and renewable natural gas fueling network, the companies said.Once operational, the projects are expected to supply enough fuel for about 800 Class 8 heavy-duty trucks, providing a lower-cost alternative to diesel while eliminating Scope 1 and Scope 2 emissions from fuel use.The companies said rising diesel price volatility, improving regulatory certainty for combustion engines and the rollout of next-generation natural gas engines are encouraging more trucking fleets to switch fuels."Bringing new RNG production online amid accelerating fleet demand reinforces the strength of our vertically integrated model," Jonathan Maurer, co-chief executive officer of Opal Fuels, said, adding that the projects support long-term revenue growth, margin expansion and shareholder returns.The facilities will use established technology to capture methane produced from decomposing organic waste at both landfills and convert it into renewable natural gas for use as a lower-carbon transportation fuel, the companies said.

$GFL$OPAL
Commodities

IATA, ICAO Expand Cooperation on Sustainable Aviation Fuel Tracking

The International Air Transport Association and the International Civil Aviation Organization are set to deepen cooperation to improve tracking of sustainable aviation fuels, IATA said in a statement on Wednesday.The move aims to strengthen transparency and support the aviation industry's goal of reaching net-zero carbon emissions by 2050, IATA said.The agreement will explore how SAF registries and related data can support ICAO's long-term aspirational goal monitoring and reporting framework and the development of fuel accounting systems for international aviation.ICAO Secretary General Juan Carlos Salazar said greater transparency and cooperation were essential to achieving the agency's net-zero emissions goal for international aviation by 2050.He said enhanced monitoring of SAF production, distribution and use would strengthen global fuel accounting systems and help ensure climate investments are recognized consistently under ICAO frameworks.The industry's decarbonization push comes against a backdrop of turmoil in fuel markets.IATA's head of fuel, Daniel Chereau, said on Wednesday that airlines have been hit hard by soaring jet fuel margins and supply disruptions stemming from the conflict in the Middle East, with some carriers unable to hedge their exposure, Reuters reported."Some airlines with more elaborate hedging strategies get a bit of a cushion," he reportedly told the S&P Global Energy Middle East Petroleum and Gas Conference.Soaring jet fuel refining margins, or crack spreads, added to pressure on the industry. In northwest Europe, jet fuel crack spreads surged to a record above $121 a barrel in March from about $30 before the outbreak of the Iran war in late February, he reportedly said, citing LSEG data.The Middle East supplies much of the world's jet fuel, but exports have been disrupted by the effective closure of the Strait of Hormuz and attacks on energy infrastructure.Chereau also reportedly said signs of demand destruction were emerging in aviation, driven largely by flight cancellations and fuel shortages at some airports rather than fuel prices themselves.He warned such disruptions could become more frequent if the conflict persists, with prolonged instability potentially weighing on passenger demand.