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

Christina Lake, we’ve been talking about this one for a little bit, but really, it’s building a pipeline up into the Narrows resource and bringing that back and processing it at Christina Lake, which is a much different concept than we had probably five, six years ago in a way to access this resource at a much lower capital cost. So, by doing that, we’ll drop our SORs and we will see kind of an incremental 20,000 to 30,000 barrels a day of production at Christina Lake. Again, that kind of starts ramping up in the 2025 time period and full production kind of in the 2026 time period. At Sunrise, we’ve been actively working on applying the Cenovus technology since acquiring the asset. We’ve spent a bit of time with infills and re drills and redevelopment wells this year, and so you’re seeing production kind of north of that 50,000 barrels a day.

But we’re adding pads. So, the last time a pad was added at sunrise was in the 2017 timeframe. So, we have a whole pad development program. The first one we’ll be steaming at the back end of 2023 here and through 2024. But we’re also adding additional pads. So, through kind of that 2025, 2026 timeframe, you can see us fully getting the full utilization of all the steam capacity at the asset. And that should drive our production up into that mid-60s type range. So, we’re kind of going to see a 20,015 to 20,000 barrel-a-day growth at sunrise. And then on our East Coast project, the West White Rose Project this is where a bit more capital will be going in 2024 and 2025 time periods. As we finish that project. We’re north of 70% complete. We hit some milestones on our gravity-based structure in the quarter.

And we’ll be spending 2024 in 2025 to finish construction tow it off offshore, made up the top sides and the gravity-based structure, and commence drilling in 2025. So, we’ll start seeing production growing in 2026 and peaking kind of in that 2028 timeframe at about an incremental 45,000 barrels a day. So, really excited about the growth projects the volume it adds at relatively modest or low capital. And to Jon’s point, doing all this in that $4.5 billion to $5 billion capital range over the next couple years. So, Shane, Neil, just what you should be thinking about just for your model, Neil, you should be thinking kind of in two, nine to three range for sustaining capital and then the residual being growth.

Operator: Your next question is from Menno Hulshof from TD Securities.

Menno Hulshof : Good morning. So, I’ve got a couple of follow-up questions from some of the prior questions. So maybe I’ll start with a high-level one on the operational outlook for downstream. Scale of one to 10, where do you think you are today on a downstream performance from a pure operational perspective relative to where you’d like to get to, and then where else do you see wound for improvement within US refining?

Jonathan McKenzie: Well, I’m going to let Keith answer the specifics on this, but what I would tell you — is refining is a core part of our business. We have built a heavy oil value chain that we think has significant value to the shareholders. And we think it’s actually quite unique in its construct. But our goal is to be as good at running the downstream as we are — our thermal assets. And that’s not necessarily going to happen overnight, but that’s the trajectory that we’re on and that’s where we want to take this piece of business refining and upgrading is absolutely core to this business. So, what you’ll see from us over the coming years is a continued focus on sweating these assets, grinding out value, not just on the operating side in terms of reliability, throughput, and the like, but also on the commercial side of this business and making sure that we’re making all the right decisions and capturing as much margin as possible.

But maybe I’ll turn it over to Keith. I don’t know that he’s going to give you an answer on one to 10, but I think he’ll give you some indication on where we think we are.