Cenovus responds to low oil prices with reduced 2020 capital spending

CALGARY, Alberta, March 10, 2020 (GLOBE NEWSWIRE) -- Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) is reducing its 2020 capital spending by approximately 32% in order to maintain the strength of its balance sheet. Cenovus is also temporarily suspending its crude-by-rail program and deferring final investment decisions on major growth projects. These measures are being taken in response to the recent significant decline in world benchmark crude oil prices. The company continues to work toward funding its revised capital program and current dividend within cash flow in this challenging commodity price environment.

“We have top-tier assets, one of the lowest cost structures in our industry and we’ve made significant progress in deleveraging over the past few years,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “Consistent with our commitment to balance sheet strength, we’re exercising our flexibility to reduce discretionary capital while maintaining our base business and delivering safe and reliable operations.”

2020 budget forecast
	Revised budget	Original budget1	% change2
Total capital investment ($ billions)	0.9 – 1.0	1.3 – 1.5	-32
Total oil sands production (Mbbls/d)	350 – 400	390 – 410	-6
Total production (MBOE/d)	432 – 486	472 – 496	-5

¹ Original 2020 budget announced December 10, 2019.
² Based on the midpoint of the ranges.

As a result of Cenovus’s decision to temporarily suspend its crude-by-rail program, the company will no longer be making use of credits under Alberta’s Special Production Allowance (SPA) program. Therefore, oil sands production in 2020 is now expected to average between 350,000 barrels per day (bbls/d) and 400,000 bbls/d, approximately 6% lower than the company’s December 9, 2019 guidance for the year.

Capital originally budgeted to progress potential phase H expansions at both Christina Lake and Foster Creek to sanction-ready status this year has been put on hold, and the majority of the remaining planned capital spend at the company’s Deep Basin and Marten Hills operations has been suspended. Modest spending on engineering and permitting for a potential diluent recovery unit (DRU) will be completed, however, in the current environment, Cenovus does not intend to sanction any new projects.