Cenovus Energy Inc. (NYSE:CVE) Q3 2023 Earnings Call Transcript

Keith Chiasson : Yes. Thanks, Dennis. Obviously, superior being the first stop on kind of the mainline system, and the current rate of differentials, it does provide a significant crude advantage and something different than we had online at the end of 2022. So pretty, pretty excited to have this asset up and running and fully operational. So, we will continue to look at the economics and obviously, we will make economic decisions on when we run that inventory off. But in today’s environment, we’re still seeing relatively robust returns to do that. I think the other thing I’d offer up, Dennis, now that we have the integrated network up and running and the other assets up and running, we’ve been moving some of that intermediate inventory to other assets to run off those products and make finished product. And we’ve been doing that for a period of time. So, it’s not just that we have to run it through the existing asset.

Operator: Your next question is from Neil Mehta from Goldman Sachs.

Neil Mehta : Just some early thoughts on 2024 capital would be great. I think, you guys do have some interesting growth projects in flight, and so can you help us think about framing this out, recognizing we’re going to get a little more clarity on this year over the next couple of months?

Jonathan McKenzie: You’re exactly right. We are going to come up with a more formal budget release in December. But what we’ve been really trying to communicate to the market is that our capital spending over the next number of years is going to be between the $4.5 billion to $5 billion range. So very similar to what you saw in 2023. In 2023, we made a conscious decision to put some capital to work on some growth projects that we have in the portfolio. These are very high-return, very efficient projects that we started funding in ‘23, and we’ll continue to fund through next year and really through the planning period that we’re looking at. But don’t think that the capital budget is going to look much different than what you’ve seen this year in that $4.5 billion to $5 billion range.

Neil Mehta : And then to build off that, can you talk about what some of those key growth projects are in 2024 and that maybe that higher spend than maybe some were expecting a couple years ago? Some of it’s because of differentiated projects, not just because of higher sustaining capital levels. So, providing a little more color on what those are could be helpful.

Jonathan McKenzie: Again, we’ve been hopefully clear on differentiating what we consider to be sustaining capital and that’s the capital keep production flat in our fixed assets in a safe and stable condition from the growth capital. But again, these projects we started funding them in ‘23 and we’ll continue through ‘24, ’25, and ‘26. But maybe Keith, you might want to talk about the big four projects that we’ve got going on in particular.

Keith Chiasson: Yes, shore Jon. And thanks for the question Neil. I just want to anchor first on the fact that we look at investments in these growth projects at the bottom of the cycle, and they all obviously chin the bar and are relatively low capital to get the growth that we’re going to be talking about. And as Jon indicated, we’ve kind of kicked these off through the 2023 period and they’ll continue through 2024. But we’re pretty excited about the Foster Creek, the Christina Lake Sunrise, and West White Rose Projects all contributing about north of a hundred thousand barrels a day of growth. So, at Foster Creek, we’re doing a steam expansion, we’ll be able to kind of wrap that up in the 2025 time period and start ramping up steam and production that will add about 30,000 barrels a day of production in the 2026, 2027 time period.