Natural Gas Producer Cenovus Forecasts 21% Increase in 2023 Capital Spending
(Reuters) — Canada's Cenovus Energy on Tuesday forecast higher capital expenditure and production in 2023 and said its natural gas business could grow by as much as 25% in coming years due to higher prices.
The Calgary-based oil and gas producer said total upstream production will rise around 3% year-on-year to 800,000-840,000 barrels of oil equivalent per day, and total spending will increase around 21% to between C$4 billion ($2.94 billion) and C$4.5 billion.
The company will direct up to C$1.7 billion towards growth projects including building the offshore West White Rose project in Atlantic Canada, optimizing oil sands assets and improving reliability in its downstream refinery business.
Last week, rivals Suncor Energy and Canadian Natural Resources also said they expect higher capital expenditure in 2023.
However, Canadian producers remain cautious given volatile crude prices, which soared nearly 80% earlier this year following Russia's invasion of Ukraine but have since given up those gains, and stubborn inflation.O/R
"One of the great achievements in this budget is we've largely been able to keep operating costs flat year-on-year in most business areas," Cenovus CEO Alex Pourbaix told Reuters in an interview.
Cenovus expects to hit its target of reducing net debt to C$4 billion next year, at which point the company plans to return 100% of excess free funds flow to shareholders.
Natural gas prices have also rallied and Pourbaix said the company has a significant number of opportunities in western Canada that it will develop over time.
Cenovus' conventional business, which includes natural gas production, makes up around a sixth of its total output. The company produces 580 million cubic feet a day of natural gas that it uses to feed its oil sands operations. Pourbaix called that business "incredibly attractive at these kind of prices" and said Cenovus plans to grow it beyond its own needs.
"It will depend on opportunities and economics, but we are spending about 20-25% more in capital and over time it should not surprise anyone to see production grow around that level," he said.
Cenovus expects its acquisition of a 50% interest in the Toledo, Ohio, refinery will close in the first quarter of 2022 and the refinery will restart operations after being damaged by a fire in September.
Cenovus shares were last down 2.7% on the Toronto Stock Exchange at C$25.37, tracking a decline in energy stocks.
($1 = 1.3627 Canadian dollars)
Related News
Related News
- Kinder Morgan Proposes 290-Mile Gas Pipeline Expansion Spanning Three States
- Enbridge Plans 86-Mile Pipeline Expansion, Bringing 850 Workers to Northern B.C.
- Intensity, Rainbow Energy to Build 344-Mile Gas Pipeline Across North Dakota
- U.S. Moves to Block Enterprise Products’ Exports to China Over Security Risk
- Court Ruling Allows MVP’s $500 Million Southgate Pipeline Extension to Proceed
- U.S. Pipeline Expansion to Add 99 Bcf/d, Mostly for LNG Export, Report Finds
- A Systematic Approach To Ensuring Pipeline Integrity
- 275-Mile Texas-to-Oklahoma Gas Pipeline Enters Open Season
- LNG Canada Start-Up Fails to Lift Gas Prices Amid Supply Glut
- Kinder Morgan Gas Volumes Climb as Power, LNG Demand Boost Pipeline Business
Comments