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Cenovus Energy (CVE) Slips 4% as Q2 Earnings Miss Estimates

Zacks Equity Research
·3 min read

Cenovus Energy Inc. CVE declined almost 4% after reporting lower-than-expected earnings for the second quarter on Jul 29. The underperformance was owing to a significant increase in transportation and blending expenses and costs for purchased products. This was partially offset by higher daily oil sand production.

The company reported second-quarter 2021 earnings per share of 9 cents, missing the Zacks Consensus Estimate of earnings of 29 cents. The bottom line, however, compared favorably with the year-ago loss of 25 cents per share.

Revenues of $8,610 million increased from the year-ago $1,568 million.

Cenovus Energy Inc Price, Consensus and EPS Surprise

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

Cenovus Energy Inc price-consensus-eps-surprise-chart | Cenovus Energy Inc Quote

Operational Performance

Upstream

Quarterly operating margin from the Oil Sands unit was reported at C$1,411 million, improving from the year-ago C$130 million. Higher daily oil sand production primarily aided the segment.

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In the June quarter, the company recorded daily oil sand production of 549.4 thousand barrels, up 47.2% year over year on contributions from its Christina Lake operations.

Operating margin at the Conventional unit was C$142 million, up from C$32 million in the year-ago quarter. In the June quarter, the company recorded daily liquids production of 38.2 thousand barrels, up 42.5% year over year.

The Offshore segment generated operating margin of C$340 million. In the June quarter, the company recorded daily offshore liquid production of 27.3 thousand barrels.

Downstream

From the Canadian Manufacturing unit, the company reported operating margin of C$189 million, up from C$6 million in the year-ago quarter. The company recorded Crude Oil processed volumes at 103.5 thousand barrels per day (MBbl/D).

Operating margin from the U.S. Manufacturing unit was reported at C$96 million, deteriorating from C$123 million in the prior-year quarter. The underperformance was owing to lower refining margin. Crude oil processed volumes were recorded at 435.5 MBbl/D, signifying an improvement from 162.3 MBbl/D in the year-ago quarter.

From the Retail unit, the company reported operating margin of C$6 million.

Expenses

Transportation and blending expenses in the reported quarter increased to C$1,796 million from C$646 million a year ago. Expenses for purchased products rose to C$5,253 million from C$741 million in the prior-year quarter.

Capital Investment & Balance Sheet

The company made total capital investment of C$534 million in the quarter under review.

As of Jun 30, 2021, the Canadian energy player had cash and cash equivalents of C$1,055 million. Total long-term debt was C$12,748 million. Its total debt to capitalization was 36.3%.

Guidance

The production guidance for 2021 has been revised upward by the company to 750,000 BoE/D-790,000 BoE/D. The company projected total capital expenditure for upstream business in the band of $1,320 million to $1,510 million. Total capital guidance has been kept unchanged by the integrated player.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation WLL, Continental Resources, Inc. CLR and PDC Energy, Inc. PDCE. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.


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Cenovus Energy Inc (CVE) : Free Stock Analysis Report

Continental Resources, Inc. (CLR) : Free Stock Analysis Report

PDC Energy, Inc. (PDCE) : Free Stock Analysis Report

Whiting Petroleum Corporation (WLL) : Free Stock Analysis Report

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