Cenovus considers negligence new oilsands plan if tube ability doesn’t grow
Cenovus Energy Inc. says it will cruise negligence growth of a 50,000-barrel-per-day oilsands enlargement plan that it started building early final year if there isn’t suggestive swell on augmenting tube ability out of Alberta.
The vouch came as a Calgary-based association blamed clogged trade pipelines for a misfortune complicated oil cost discounts in 5 years during a initial 3 months of 2018, contributing to a higher-than-expected $914-million net detriment in a initial quarter.
Constraints in existent pipelines, behind response by railroads to supply locomotives to pierce oil, and oilsands outlay increases from new projects conspired in a initial entertain to forestall a cost of Western Canadian Select complicated wanton from gripping gait with improvements in New York benchmark oil prices.
Cenovus pronounced a disproportion between WCS and West Texas Intermediate widened to US$24.28 per barrel, 67 per cent aloft than in a same duration final year.
Drew Zieglgansberger, executive vice-president for upstream, told analysts on a discussion call that construction on a Christina Lake G enlargement is going good and it is approaching to start producing in a center of subsequent year.
But he pronounced Cenovus might behind commissioning of a $675-million plan or confirm to check full prolongation from it.
CEO Alex Pourbaix pronounced a association isn’t meddlesome in any new spending during a moment.
“We will not be deliberation any element new additions until we see transparent line of steer to increasing tube ability out of a province,” he pronounced on a discussion call.
Crude by rail on a rise
Pourbaix’s comments follow years of delays and doubt surrounding several vital tube projects from Alberta’s oilsands to trade markets. The Keystone XL plan to Texas has been delayed, work on a Energy East line to Quebec and New Brunswick is halted and a destiny of an stretched Trans Mountain line to Vancouver is in doubt.
Crude-by-rail shipments are approaching to ramp adult in a second half of this year and into a initial half of subsequent year to “very element volumes of oil,” Pourbaix said, adding cost discounts will urge though will expected sojourn aloft than common since rail costs some-more than tube transport.
Cenovus slowed oilsands prolongation in Feb and Mar though has returned to normal levels.
Weak pricing was a biggest reason that Cenovus missed on many forecasts, pronounced researcher Travis Wood of National Bank Financial Markets.
Oil pricing led to a association posting $469 million in risk government waste and bad healthy gas prices forced it to record a non-cash $100-million item spoil assign for a Clearwater assets.
Wood pronounced vital upkeep turnarounds during a dual U.S. refineries Cenovus owns with partner Phillips 66 prevented a downstream operations from realizing a advantage of good distinction margins in that business.
Net detriment exceeds expectations
Cenovus reported one-time separation costs of $43 million as it cut a staff count by 15 per cent in a initial quarter, and a $59-million non-cash responsibility for Calgary bureau space that exceeds stream needs.
On a call, Pourbaix pronounced a cuts are finished and he doesn’t design any some-more large-scale layoffs.
Cenovus’s net detriment amounted to 74 cents per share, compared with a year progressing distinction of $211 million or 25 cents per share.
Its handling detriment from stability operations was $752 million, or 61 cents per share, compared with a $39-million detriment final year.
Revenue was $4.61 billion, adult from $3.54 billion a year ago and above researcher estimates, as oilsands volumes scarcely doubled as a outcome of Cenovus shopping out a 50 per cent partner, ConocoPhillips, in May of final year.
Analysts had estimated a net detriment of 12 cents per share with $4.2 billion of revenue, according to Thomson Reuters data.
Article source: http://www.cbc.ca/news/canada/calgary/cenovus-loss-considers-slowing-oilsands-project-1.4635130?cmp=rss