Cenovus Energy Inc. CVE reported third-quarter 2024 adjusted earnings per share of 31 cents, which missed the Zacks Consensus Estimate of 34 cents. The bottom line also declined from the year-ago figure of 72 cents.

Total quarterly revenues of $10.45 billion topped the Zacks Consensus Estimate of $10.13 billion. The top line, however, decreased from the year-ago level of $10.87 billion.

Weak quarterly earnings can be primarily attributed to a decline in contribution from the Oil Sands and U.S. Manufacturing units. An increase in transportation and blending expenses also contributed to the same.

Operational Performance

Upstream

The quarterly operating margin from the Oil Sands unit totaled C$2.47 billion, down from C$3.02 billion reported a year ago.

In the September-end quarter, the company recorded daily oil sand production of 585.9 thousand barrels, down 2.6% year over year. The decrease can be attributed to lower contributions from the Christina Lake and Lloydminster Thermal operations.

The operating margin at the Conventional unit totaled C$12 million, a substantial decline from C$126 million recorded in the year-ago quarter. The company’s daily liquid production came in at 25.7 thousand barrels compared with 30.2 thousand barrels a year ago.

The Offshore segment generated an operating margin of C$252 million, down from C$300 million in the year-ago quarter. Cenovus recorded daily offshore liquid production of 18.9 thousand barrels, down from 20.6 thousand barrels recorded a year ago.

Downstream

The operating margin from the Canadian Manufacturing unit came in at C$60 million, down from the year-ago level of C$170 million. It recorded Crude Oil processed volumes of 99.4 thousand barrels per day (MBbl/D).

The operating margin from the U.S. Manufacturing unit reported a loss of C$383 million, significantly down from the year-ago profit of C$752 million. Crude oil processed volumes totaled 543.5 MBbl/D, down from 555.9 MBbl/D in the year-ago quarter.

Expenses

Transportation and blending expenses increased to C$2.66 billion from C$2.4 billion recorded a year ago.

Also, expenses for purchased products increased to C$1.09 billion from C$900 million in the prior-year quarter.

Capital Investment & Balance Sheet

Cenovus made a total capital investment of C$1.35 billion in the quarter under review.

As of Sept. 30, 2024, the Canada-based energy player had cash and cash equivalents of C$3.10 billion, and a long-term debt of C$7.2 billion.

Guidance

For 2024, Cenovus expects total upstream production to be in the band of 785-810 MBoe/d. The midpoint of the range suggests an increase from the year-earlier figure of 778.7 MBoe/d. The company also updated its downstream throughput projection to the range of 640-670 MBbls/d, implying an increase from 599.2 MBbls/d reported in 2023.

The company anticipates capital expenditure to be in the band of $4.5-$5 billion for the entire year.

CVE’s Zacks Rank and Key Picks

Currently, CVE carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the energy sector are Archrock Inc. AROC, The Williams Companies, Inc. WMB and FuelCell Energy FCEL. Archrock presently sports a Zacks Rank #1 (Strong Buy), while The Williams Companies and FuelCell Energy carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is an energy infrastructure company based in the United States, with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.

The Williams Companies, Inc. is a premier energy infrastructure provider in North America. The company’s core operations include finding, producing, gathering, processing, and transporting natural gas and natural gas liquids. Boasting a widespread pipeline system of more than 33,000 miles, Williams is one of the largest domestic transporters of natural gas by volume.

FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.

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