Cenovus Energy Third Quarter 2024 Earnings: Revenues Beat Expectations, EPS Lags

Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) recently announced its financial and operating results for the third quarter of 2024, with revenues surpassing expectations but earnings per share (EPS) falling short. The company generated nearly $2.5 billion in cash from operating activities, $2.0 billion of adjusted funds flow, and $614 million of free funds flow in the quarter. Upstream production of more than 771,000 barrels of oil equivalent per day (BOE/d) was slightly lower compared with the second quarter primarily due to turnaround activity at the Christina Lake oil sands facility.

Cenovus' upstream revenues were about $7.3 billion, down from $7.9 billion in the second quarter, while downstream revenues were approximately $9.2 billion, up from $9.1 billion in the prior quarter. Total operating margin was about $2.4 billion, compared with $2.9 billion in the previous quarter. Upstream operating margin was approximately $2.7 billion, down from $3.1 billion in the second quarter. The company had a downstream operating margin shortfall of $323 million in the third quarter as the Lima Refinery underwent a major planned turnaround, compared with a shortfall of $153 million in the previous quarter.


The Christina Lake turnaround, completed ahead of schedule, led to a 15,000-20,000 bbls/d production increase, exceeding forecasts. Despite this, upstream production fell 29,500 BOE/d due to other turnarounds. Cenovus' revenue dropped to $7.3B, down from $7.9B, primarily due to lower commodity prices. Compared to peers like Suncor and Canadian Natural Resources, Cenovus' revenue decline was less severe, indicating resilience amidst maintenance activities.


Cenovus' free funds flow (FFL) and excess free funds flow (EFFL) in Q3 2024 were $614 million and $146 million, respectively. Although lower than peers like Suncor and Canadian Natural Resources, Cenovus' FFL and EFFL still indicate a strong cash generation capability. The decline in EPS can be attributed to lower commodity prices and turnaround activities, which impacted upstream and downstream results. While capital investments increased, they were offset by reduced production and throughput during turnarounds. EFF, though lower than Q2, demonstrates Cenovus' financial stability and ability to generate cash even during maintenance activities.

In conclusion, Cenovus Energy's third-quarter 2024 earnings showed a mixed performance, with revenues beating expectations but EPS falling short. The company's strong cash flow generation and growth potential in major projects like West White Rose and Sunrise growth program suggest a promising outlook. Despite the short-term challenges, Cenovus' resilience and effective risk management position it well for long-term growth and shareholder returns.