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Cenovus Energy (CVE) Q4 Loss Wider Than Expected, Sales Lag

Zacks Equity Research

Cenovus Energy Inc. CVE reported fourth-quarter 2018 loss per share of $1.03, against the Zacks Consensus Estimate of earnings of 16 cents. In the prior-year quarter, the company had incurred a loss of 35 cents per share. Higher transportation and blending expenses have hurt the bottom line.

Meanwhile, quarterly revenues of $3,439 million missed the Zacks Consensus Estimate of $3,778 million and fell from the year-ago quarter’s figure of $3,999 million.

Cenovus Energy Inc Price, Consensus and EPS Surprise


Cenovus Energy Inc Price, Consensus and EPS Surprise | Cenovus Energy Inc Quote


Operational Performance

Quarterly revenues in the oil sands unit declined to C$1,419 million from C$2,311 million in the fourth quarter of 2017, courtesy of lower production of oil sands. The company recorded daily oil sand production of 326,481 barrels in the October-to-December quarter of 2018, down 9.7% year over year.

However, operating margin in the segment was a negative C$178 million, against positive C$612 million in the year-ago quarter.

Revenues in the Deep Basin unit fell to C$180 million from C$211 million in the year-ago quarter. Moreover, the segment’s operating margin came in at C$62 million, down from C$92 million in the year-ago quarter.

The divestiture of the Cenovus Pipestone Partnership marred the upside in production. Nevertheless, production from new wells primarily supported the business.

In the Refining and Marketing segment, the company generated revenues worth C$3,048 up from C$2,690 million in the year-ago quarter. The unit’s operating margin fell from C$314 million to C$251 million.

Improved refined product prices along with year-over-year higher crack spreads drove results.


Transportation and blending expenses in the reported quarter rose to C$1,269 million from C$1,214 million in the year-ago quarter.

Balance Sheet & Capital Expenditures

As of Dec 31, 2018, the Canadian energy player had cash and cash equivalents of C$781 million and total long-term debt of C$8,482 million. The total debt-to-capitalization ratio was approximately 32%. The company incurred capital expenditure of C$291 million in the quarter under review.


Cenovus Energy paid C$245 million to shareholders as dividend in 2018, higher than C$225 million a year ago.


Through 2019, the company expects total oil equivalent daily production between 472 MBOE/D and 500 MBOE/D. In 2019, the company is planning to spend between C$1,200 million and C$1,400 million. Of this, about C$735-C$855 million will be allocated toward the Foster Creek and Christina Lake oil sands operations.

For refining operations, the company is likely to invest between C$240 million and C$275 million.

Zacks Rank & Stocks to Consider

Cenovus Energy carries a Zacks Rank #5 (Strong Sell).

A few better-ranked players in the energy space are Evergy, Inc EVRG, Canadian Solar Inc CSIQ and Contura Energy CTRA, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Evergy, through its operating subsidiaries — Kansas City Power & Light Company (KCP&L) and Westar Energy, Inc — provides clean, safe and reliable energy in Kansas and Missouri. The company reported average negative earnings surprise of 11.1% in the last four quarters.

Headquartered in Ontario, Canada, Canadian Solar operates as a vertically integrated manufacturer of silicon ingots, wafers, cells, solar modules (panels) and custom-designed solar power applications. The company is expected to witness year-over-year earnings growth of 67.5% in 2018.

Bristol-based Contura Energy is a mining company. The company reported average negative surprise of 17.9% in the trailing four quarters.

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