Page 5 - NorthAmOil Week 31 2021

NorthAmOil COMMENTARY NorthAmOil

The oil sands’
prospects are being
further bolstered by
the upcoming start-
up of two major new
pipelines.

As well as being bolstered by stronger oil y/y and comparable with levels seen in the first
prices, Cenovus saw its revenues rise thanks to quarter of this year.
its acquisition of Husky Energy, which closed Imperial, which is majority-owned by Exx-
in the first quarter of this year. The company onMobil, posted a net profit of CAD366mn
reported revenues of CAD10.6bn ($8.5bn) ($293mn) for the second quarter, up from a
for the second quarter of this year, up from loss of CAD526mn ($421mn) a year ago, but
CAD2.2bn ($1.7bn) in the same quarter of 2020. down 7% from CAD392mn ($313mn) in the
Cenovus’ net profit for the latest quarter came in first quarter of this year. This was attributed to
at CAD224mn ($179mn), up from a net loss of planned turnaround activity and weaker real-
CAD235mn ($188mn) a year ago. ised margins in Imperial’s downstream business.
“Our results underscore the earnings power However, the company continued to post
of the combined company as we further inte- strong output from its largest asset, the Kearl oil
grate and deliver on our expanded asset base,” sands mine. Indeed, Imperial said that owing
said Cenovus’ president and CEO, Alex Pour- to improved reliability it was switching to one
baix. “We posted a strong second quarter and turnaround per year at Kearl and cancelling
expect to accelerate deleveraging in the second maintenance planned for this autumn. It has
half of this year.” raised full-year production guidance for 2021
Cenovus spent much of the additional cash it to 265,000 bpd, from 255,000 bpd previously.
generated in the second quarter to drive down
its net debt by roughly CAD1bn. The company What next?
reported production of 765,900 boepd for the These results come despite a recent surge of
quarter, up 65% from 465,415 boepd a year ago. COVID-19 infections in the oil sands during
Announcements from Imperial and CNRL the second quarter. This wave of infections com- Canada’s oil
followed in the days after Suncor and Cenovus plicated an already busy maintenance season for
unveiled their results. CNRL reported a net oil sands producers, some of whom had delayed exports are
profit of CAD1.6bn ($1.2bn), up from a loss maintenance work last year amid the initial wave booming, rising
of CAD310mn ($248mn) in the same quarter of the pandemic.
of 2020. This translated into adjusted earn- Thus rising production figures were still by 25.7% in
ings of CAD1.24 ($0.99) per share, beating somewhat constrained and have further poten-
analysts’ expectations of CAD0.92 ($0.74) per tial to grow. Progress on the Line 3 replacement June, following a
share, according to Refinitiv IBES data cited by and Trans Mountain expansion pipeline pro-
Reuters. jects also bodes well for future oil sands output slowdown in April
CNRL said it would plan to set aside 50% growth as new takeaway capacity is added. and May.
of free cash flow (FCF) for share repurchases Enbridge said last week that the Line 3
once it reaches CAD15bn ($12bn) in debt, replacement is set to be in service by the end of
which is anticipated to happen in the fourth the year, adding around 370,000 bpd of export
quarter. capacity, despite a last-ditch effort by the pipe-
The company also unveiled new environ- line’s opponents to derail it in court. The Trans
mental targets, saying it would target a 50% Mountain expansion, meanwhile, is now being
reduction in methane emissions from its North targeted for start-up by the end of 2022.
America exploration and production business Even now, though, Canada’s oil exports are
by 2030 compared with 2016 levels. booming, rising by 25.7% in June, following a
CNRL’s North American liquids production slowdown in April and May, according to Sta-
reached 478,314 barrels per day (bpd), up 16% tistics Canada.™

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