Cenovus Second-Quarter Profit Falls on Lower Hedging Gains
Cenovus Energy Inc. (CVE), the fourth-largest Canadian oil producer, said second-quarter profit fell 55 percent on higher currency losses and lower hedging gains.
Net income of C$179 million ($174 million), or 24 cents a share, compared with C$397 million, or 52 cents, a year earlier, the Calgary-based company said today in a statement. Excluding one-time items, per-share profit missed the 49-cent average of 17 analysts’ estimates compiled by Bloomberg.
The drop in net income was partially offset by a decline in deferred tax expenses, the company said. Cash flow was lower as the narrowing spread between U.S. benchmark oil prices and Western Canada Select resulted in increased feedstock costs.
Higher heavy oil prices will boost the value of the company’s output from its oil-sands operations to $53 a barrel from $33 a barrel in the first quarter, said Greg Pardy, an analyst at Royal Bank of Canada, in a July 18 note.
Cenovus co-owns a refinery in Borger, Texas, and another in Roxana, Illinois, with Phillips 66. (PSX) The facilities together can process more than 450,000 barrels of oil a day, according to Cenovus’s website.
Total oil production rose 10 percent to more than 171,000 barrels a day in the quarter.
Cenovus fell 0.7 percent to C$32.25 yesterday in Toronto. The stock, which is down 3.1 percent this year, has 18 buy and six hold ratings from analysts.
Suncor Energy Inc., Imperial Oil Ltd. and Husky Energy Inc. are the three largest Canadian oil producers by sales, according to data compiled by Bloomberg.
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