Page 5 - NorthAmOil Week 49 2022

NorthAmOil COMMENTARY NorthAmOil

Cenovus is investing
in new projects
including West White
Rose, which will be
based offshore Eastern
Canada.

especially if natural gas prices remain favourable Further details of Imperial’s plans for 2023
and the company proceeds with plans to develop still need to be disclosed, but it does not appear
new output. likely that the company would deviate away
“It will depend on opportunities and econom- from the path it is already on. Oil prices remain
ics but we are spending about 20-25% more in volatile, encouraging producers to be cautious,
capital and over time it should not surprise any- but nothing has happened in recent weeks to
one to see production grow around that level,” make them rethink existing plans.
Cenovus’ CEO, Alex Pourbaix, told Reuters in CNRL for its part anticipates that output
early December. will grow by 4% in 2023 to reach 1.33-1.37mn
The company anticipates that its production boepd (See: CNRL targets 4% production growth
will grow by around 3% year on year in 2023 to in 2023, page 6). The company’s capex budget is
800,000-840,000 boepd, while its capex will rise forecast to rise to CAD5.2bn, and it described
by roughly 21% to CAD4.0-4.5bn ($3.0-3.3bn). the budget as “disciplined”.
Pourbaix noted, however, that Cenovus had Notably, CNRL has also set a new target for a
largely been able to keep its operating costs flat 40% reduction in total corporate absolute Scope
y/y across most of its business areas. 1 and Scope 2 greenhouse gas (GHG) emis-
The 2023 budget includes CAD2.8bn sions by 2035, from a 2020 baseline. All four
($2.1bn) of sustaining capital to maintain base companies are part of the Pathways Alliance,
production, as well as CAD1.2-1.7bn ($887mn which accounts for the majority of oil sands
to $1.3bn) that will be directed towards optimi- production and aims to cut oil sands emissions
sation and growth. The latter figure includes the to net zero by 2050. Efforts on this front will
construction of the West White Rose project be slow-moving, but emissions targets will be
offshore Eastern Canada. closely watched, and CNRL noted that federal
Debt reduction – another priority for all of and provincial support for the Pathways Alli- Over the
the major companies – also features in Ceno- ance initiatives gave it the confidence to set an
vus’ plans, and the producer expects to hit its “aggressive” new emissions reduction goal. longer term,
target of reducing its net debt to CAD4.0bn next decarbonisation
year. Once it has reached this target it is plan- What next?
ning to return 100% of excess free funds flow to There is still plenty that could complicate the pressures are
shareholders. four companies’ plans, including further oil
price volatility, pressure to cut emissions more expected to
Imperial and CNRL quickly, ongoing cost inflation and unexpected
When Imperial reported its third-quarter results operational challenges. However, the producers’ play into the
in late October, the company said it anticipated strategies have been relatively consistent during companies’ plans
a capex budget of CAD1.4bn ($1.0bn) in 2023. recent months, and it looks as though efforts to
This includes spending for ongoing production balance shareholder returns with growth will more and more.
optimisation projects at the company’s Cold continue.
Lake and Kearl oil sands operations. Over the longer term, decarbonisation pres-
Imperial’s plans for the final quarter of 2022 sures are expected to play into the companies’
involved continuing to operate at maximum lev- plans more and more. Against this backdrop, it
els while also reducing its outstanding debt. The would not be surprising to see them focus on
company also raised its quarterly dividend and operations beyond the oil sands. Indeed, Ceno-
announced plans to buy back more shares at the vus’ expectations about natural gas prices and
time, illustrating its efforts to keep focusing on future growth suggest that this could already be
shareholder returns as well. happening to some extent.™

Week 49 08•December•2022 www. NEWSBASE .com P5