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Released December 15, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Cenovus Energy Incorporated (TSX:CVE) (Calgary, Alberta) is keeping its planned capital spending for 2018 largely in line with its expected total spending for the current year, as it plans to cut 15% of its workforce and pay off long-standing debts. The company plans to invest between $1.5 billion and $1.7 billion in 2018, mostly to maintain production at its operations in the Alberta oil sands. Industrial Info is tracking $4.3 billion in active projects involving Cenovus, including more than $1.6 billion under construction.
Despite the smaller work force, Cenovus said in a press release that it expects to produce between 483,000 and 510,000 barrels of oil equivalent per day in 2018, an increase of 4% to 5% when compared with 2017.
Capital spending not attributed to base production at Cenovus' oil sands assets will go largely toward ongoing construction of the $800 million Phase G bitumen-processing plant expansion at Christina Lake, which will add 50,000 barrels per day (BBL/d) of capacity. Initial production is expected in the second half of 2019, and the project is expected to ramp up to full production within the following 12 months. Cenovus noted in a press release that Phase 1G is "proceeding very well, with capital costs for both the plant and wells coming in lower than expected."
Cenovus also has an eye on an $800 million Phase H expansion at Christina Lake, which would add another 50,000 BBL/d of capacity for an estimated total production of 288,000 BBL/d. For more information, see Industrial Info's project reports on the 1G expansion and the 1H expansion at Christina Lake.
Much of Cenovus' efforts to pay down debt are related to its purchase earlier this year of ConocoPhillips' (NYSE:COP) (Houston, Texas) oil and natural gas assets in Canada, in a deal worth about $17 billion. Last month, Cenovus agreed to sell its Weyburn oil facility in southern Saskatchewan to Whitecap Resources Incorporated (TSX:WCP) (Calgary) for $738.5 million; it was the last of four "legacy" asset sales to finance the ConocoPhillips acquisition, which has been met with heavy skepticism from some of Cenovus' investors. Industrial Info is tracking $14 million in production upgrades at Weyburn, a 25,000-BBL/d field with more than 900 wells. For more information, see Industrial Info's project report.
Industrial Info also is tracking more than $30 million in maintenance turnarounds at Cenovus facilities that are scheduled for 2018.
Next year, Cenovus expects to reduce its per-barrel oil sands operating costs by 8% and per-barrel oil sands sustaining capital costs by 12% when compared with its 2017 forecast, according to a company press release. It also expects to reduce expenses through more efficient drilling, development planning, and scheduling for oil sands well start-ups.
"Our priorities for 2018 are to reduce costs and deleverage our balance sheet while maintaining capital discipline," said Alex Pourbaix, Cenovus' chief executive officer. "The sooner we can achieve our long-term debt ratio goal, the sooner we can move to balance returning cash to shareholders with disciplined investments in high-return growth."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
Despite the smaller work force, Cenovus said in a press release that it expects to produce between 483,000 and 510,000 barrels of oil equivalent per day in 2018, an increase of 4% to 5% when compared with 2017.
Capital spending not attributed to base production at Cenovus' oil sands assets will go largely toward ongoing construction of the $800 million Phase G bitumen-processing plant expansion at Christina Lake, which will add 50,000 barrels per day (BBL/d) of capacity. Initial production is expected in the second half of 2019, and the project is expected to ramp up to full production within the following 12 months. Cenovus noted in a press release that Phase 1G is "proceeding very well, with capital costs for both the plant and wells coming in lower than expected."
Cenovus also has an eye on an $800 million Phase H expansion at Christina Lake, which would add another 50,000 BBL/d of capacity for an estimated total production of 288,000 BBL/d. For more information, see Industrial Info's project reports on the 1G expansion and the 1H expansion at Christina Lake.
Much of Cenovus' efforts to pay down debt are related to its purchase earlier this year of ConocoPhillips' (NYSE:COP) (Houston, Texas) oil and natural gas assets in Canada, in a deal worth about $17 billion. Last month, Cenovus agreed to sell its Weyburn oil facility in southern Saskatchewan to Whitecap Resources Incorporated (TSX:WCP) (Calgary) for $738.5 million; it was the last of four "legacy" asset sales to finance the ConocoPhillips acquisition, which has been met with heavy skepticism from some of Cenovus' investors. Industrial Info is tracking $14 million in production upgrades at Weyburn, a 25,000-BBL/d field with more than 900 wells. For more information, see Industrial Info's project report.
Industrial Info also is tracking more than $30 million in maintenance turnarounds at Cenovus facilities that are scheduled for 2018.
Next year, Cenovus expects to reduce its per-barrel oil sands operating costs by 8% and per-barrel oil sands sustaining capital costs by 12% when compared with its 2017 forecast, according to a company press release. It also expects to reduce expenses through more efficient drilling, development planning, and scheduling for oil sands well start-ups.
"Our priorities for 2018 are to reduce costs and deleverage our balance sheet while maintaining capital discipline," said Alex Pourbaix, Cenovus' chief executive officer. "The sooner we can achieve our long-term debt ratio goal, the sooner we can move to balance returning cash to shareholders with disciplined investments in high-return growth."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
