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UPDATE 3-Canada's Cenovus Energy posts profit on rising output, doubles dividend

(Adds CEO comments, details on production levels, carbon capture, changes story identification tag)

By Sahil Shaw and Rod Nickel

Nov 3 (Reuters) - Canada's Cenovus Energy Inc said on Wednesday it would double its dividend and buy back shares after the oil and gas producer posted a quarterly profit versus a year-ago loss, lifted by rising production and improving oil demand.

Investors have rewarded companies that spend excess cash on dividends and buybacks, rather than on growth.

Cenovus' stock rose by 0.9% in Toronto, standing out from its Canadian peers who lost ground. Shares of rival Suncor Energy spiked last week after it also said it would double its dividend.

Cenovus intends to buy back up to 10% of its public float, as it expects to soon achieve its interim net debt target of below C$10 billion.

The company has little interest in any large expansion of production, but has found numerous opportunities from its Husky Energy acquisition this year to boost output in smaller ways, Chief Executive Alex Pourbaix said.

Total upstream production stood at 804,800 barrels of oil equivalent per day (boepd) in the third quarter, up 70.6% from a year ago.

Downstream throughput, or the amount of processed crude, nearly tripled to 554,100 barrels per day.

Cenovus plans to release new emissions reduction targets next month, and its Pathways carbon capture partnership with other producers looks to play a key role.

Pembina Pipeline Corp, which is part of a competing proposal, has reached out to Pathways and Shell's Polaris project to work together https://www.reuters.com/article/idCAKBN2HN2CD?edition-redirect=ca.

"Down the road, if there are benefits to collaborating and connecting projects together, I think people would have a very open mind," Pourbaix said in an interview, adding that he was not familiar with those discussions.

The company posted net income of C$551 million ($443.78 million), or 27 Canadian cents per share, in the quarter, compared with a loss of C$194 million, or 16 Canadian cents per share, one year ago. ($1 = 1.2416 Canadian dollars) (Reporting by Sahil Shaw in Bengaluru and Rod Nickel in Winnipeg Editing by Shailesh Kuber and Matthew Lewis)