Canada’s Cenovus strong in Q1 after Husky acquisition
Canadian oil sands producer Cenovus Energy reported Q1 2021 net earnings of C$220mn (US$180.6mn) on May 7, reversing a year-ago net loss of C$1.8bn, and attributed the improvement primarily to its acquisition on January 1 this year of Husky Energy.
Although Cenovus already had liquids-rich natural gas assets in Alberta’s Deep Basin region, which it used primarily to fuel its thermal oil sands operations, the acquisition of Husky brought complementary producing assets in the same area, as well as gas producing assets in the Liwan and Liuhua fields offshore China and Husky-CNOOC Madura (HCML) joint venture assets in Indonesia.
The result was natural gas production in Q1 this year that was more than double Cenovus’ own gas output a year ago: 895mn ft3/day versus 395mn ft3/day. Crude oil and natural gas liquids production rose nearly 50%, to 620,090 b/day from 416,802 b/day.
The Canadian gas assets are included in Cenovus’ Conventional operating segment, which in the first quarter generated an operating margin of C$210mn, sharply higher than the C$51mn margin reported in Q1 2020. Cenovus attributed the improvement to stronger natural gas market prices and to pipeline and storage assets and inventory that came with Husky.
Conventional segment netbacks jumped to C$15.80/barrel of oil equivalent (boe) from C$5.32/boe a year ago, driven by higher sales prices and sales volumes. Average realised prices for natural gas sales volumes increased to C$4.23/’000 ft3 from C$2.17/’000 ft3.
The offshore China and Indonesian assets are part of Cenovus’ Offshore segment, which generated a Q1 operating margin of C$344mn and an operating cost of C$9.37/boe. Pre-acquisition metrics were not provided by Cenovus.
Production at the Liwan offshore gas project in the South China Sea averaged a record 60,832 boe/day, while the segment’s natural gas production averaged 288mn ft3/day and fetched an average realised price of C$11.64/’000 ft3.