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Cenovus (CVE) Misses Q1 Earnings Estimates, Beats Revenues

Zacks Equity Research
Baker Hughes' (BHGE) better-than-expected earnings in first-quarter 2019 are backed by higher order volume in the Subsea Production Systems business.

Cenovus Energy Inc. CVE reported first-quarter 2019 earnings per share of 5 cents, missing the Zacks Consensus Estimate of 13 cents. In the prior-year quarter, the company had incurred a loss of 48 cents.

Meanwhile, quarterly revenues of $3,908 million surpassed the Zacks Consensus Estimate of $3,751 million and rose from the year-ago quarter’s figure of $3,722 million.

Strong contributions from the Refining and Marketing segment primarily supported the leading integrated energy firm’s quarterly results. This was however partially offset by lower oil sand production volumes and the reduced contributions from the Deep Basin business unit.

Operational Performance

Quarterly revenues at the Oil Sands unit declined to C$2,250 million from C$2,348 million in the first quarter of 2018, courtesy of lower production of oil sands. The company recorded daily oil sand production of 342,980 barrels in the March quarter of 2019, down 4.6% year over year.

However, operating margin at the segment surged to C$841 million from the year-ago quarter’s C$106 million, thanks to higher Western Canadian Select (WCS) prices.

Revenues at the Deep Basin unit fell to C$206 million from C$224 million in the year-ago quarter. Moreover, the segment’s operating margin came in at C$94 million, down from C$99 million in the year-ago quarter.

At the Refining and Marketing segment, the company generated revenues worth C$2,689 million, up from C$2,232 million a year ago. Moreover, the unit’s operating margin was recorded at C$304 million against the year-ago quarter’s loss of C$48 million.


Transportation and blending expenses in the reported quarter fell to C$1,159 million from C$1,514 million in the year-ago quarter.

Balance Sheet & Capital Expenditures

As of Mar 31, 2019, the Canadian energy player had cash and cash equivalents of C$244 million and total long-term debt of C$7,715 million. The total debt-to-capitalization ratio was approximately 32.5%. The company incurred capital expenditure of C$321 million in the quarter under review.


Through 2019, the company expects total oil equivalent daily production between 445 MBOE/D and 475 MBOE/D. In 2019, the company is planning to spend between C$785 million and C$930 million on upstream operations. Of this, about C$425-C$475 million will be allocated toward the Christina Lake oil sands operations and C$250-C$300 million for Foster Creek.

For refining operations, the company is likely to invest between C$225 million and C$250 million.

Zacks Rank and Other Key Picks

Cenovus currently carries a Zacks Rank #2 (Buy). Other prospective players in the energy space are ProPetro Holding Corp. PUMP, Parsley Energy PE and TransCanada Corp. TRP, each holding a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.   

The Zacks Consensus Estimate for Midland, TX-based ProPetro’s 2019 earnings is pegged at $2.42, indicating 21% growth over the year-ago reported figure. Next year’s forecast is $2.70, hinting at 11.5% growth.

The Zacks Consensus Estimate for Austin, TX-based Parsley’s 2019 earnings stands at $1.53, implying an 8.5% improvement over the prior-year reported number. Next year’s projection is $2.47, calling for 61.8% growth.

TransCanada has beaten estimates in the last four quarters, the average being 19%.

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