6-K
CENOVUS ENERGY INC. (CVE)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For February 2025
Commission File Number: 1-34513
CENOVUS ENERGY INC.
(Translation of registrant’s name into English)
4100, 225 6 Avenue S.W.
Calgary, Alberta, Canada T2P 1N2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
DOCUMENTS FILED AS PART OF THIS FORM 6-K
See the Exhibit Index to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 20, 2025
| CENOVUS ENERGY INC. | ||
|---|---|---|
| (Registrant) | ||
| By: | /s/ Christine D. Lee | |
| --- | --- | --- |
| Name: | Christine D. Lee | |
| Title: | Assistant Corporate Secretary |
Form 6-K Exhibit Index
| Exhibit No. | |
|---|---|
| 99.1 | News Release dated February 20, 2025 |
| 99.2 | Interim Consolidated Financial Statement (unaudited) for the period ended December 31, 2024 |
Document
| Exhibit 99.1 | |
|---|---|
| News release |  |
Cenovus announces fourth-quarter and full-year 2024 results
Calgary, Alberta (February 20, 2025) – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) today announced its fourth-quarter and full-year 2024 financial and operating results. In the quarter, the company generated over $2.0 billion in cash from operating activities, $1.6 billion of adjusted funds flow and $123 million of free funds flow. The Upstream business continued to deliver strong performance, with production of 816,000 barrels of oil equivalent per day (BOE/d)1 in the quarter, including a new quarterly Oil Sands production record of 628,500 BOE/d. In the Downstream, total crude throughput increased by almost 24,000 barrels per day (bbls/d) from the previous quarter to 666,700 bbls/d, representing an aggregate utilization rate of 93%.
Highlights
•Delivered quarterly Upstream production of 816,000 BOE/d, an increase of 6% relative to the previous quarter and 1% relative to the fourth quarter of 2023.
•Highest-ever quarterly and annual Oil Sands production rates at 628,500 BOE/d and 610,700 BOE/d respectively, including record annual rates at both Foster Creek and the Lloydminster thermal assets.
•Improving quarterly Downstream operating performance, with utilization of 97% in Canadian Refining and 92% in U.S. Refining. U.S. Refining operating expenses, excluding turnaround costs, of $10.89 per barrel were down 18% relative to the fourth quarter of 2023.
•Achieved significant milestones on Cenovus’s major Upstream growth projects, including mechanical completion of the Narrows Lake pipeline, executing the SeaRose floating production, storage and offloading (FPSO) vessel life extension dry dock and reaching mechanical completion of both the concrete gravity structure (CGS) and topsides for the West White Rose project.
•Returned $706 million to shareholders in the fourth quarter, including $108 million through share purchases, $348 million through common and preferred share dividends and $250 million through the redemption of Cenovus Series 3 preferred shares on December 31, 2024.
“We delivered strong operating performance this quarter. Our industry leading Oil Sands assets set production records and our Downstream business continued to demonstrate improvements in reliability and unit costs,” said Jon McKenzie, Cenovus President & Chief Executive Officer. “In 2025, we will build on this momentum, focusing on operational execution while advancing our key growth projects to deliver long-term value for shareholders.”
Financial summary
| ($ millions, except per share amounts) | 2024 Q4 | 2024 Q3 | 2023 Q4 | 2024 FY | 2023 FY |
|---|---|---|---|---|---|
| Cash from (used in) operating activities | 2,029 | 2,474 | 2,946 | 9,235 | 7,388 |
| Adjusted funds flow2 | 1,601 | 1,960 | 2,062 | 8,164 | 8,803 |
| Per share (diluted)2 | 0.87 | 1.05 | 1.08 | 4.38 | 4.54 |
| Capital investment | 1,478 | 1,346 | 1,170 | 5,015 | 4,298 |
| Free funds flow2 | 123 | 614 | 892 | 3,149 | 4,505 |
| Excess free funds flow2 | (416) | 146 | 471 | 1,297 | 2,466 |
| Net earnings (loss) | 146 | 820 | 743 | 3,142 | 4,109 |
| Per share (diluted) | 0.07 | 0.42 | 0.32 | 1.67 | 2.09 |
| Long-term debt, including current portion | 7,534 | 7,199 | 7,108 | 7,534 | 7,108 |
| Net debt | 4,614 | 4,196 | 5,060 | 4,614 | 5,060 |
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Production and throughput
| (before royalties, net to Cenovus) | 2024 Q4 | 2024 Q3 | 2023 Q4 | 2024 FY | 2023 FY |
|---|---|---|---|---|---|
| Oil and NGLs (bbls/d)1 | 670,600 | 630,500 | 662,600 | 653,800 | 640,000 |
| Conventional natural gas (MMcf/d) | 873.3 | 844.6 | 876.3 | 860.2 | 832.6 |
| Total upstream production (BOE/d)1 | 816,000 | 771,300 | 808,600 | 797,200 | 778,700 |
| Total downstream throughput (bbls/d) | 666,700 | 642,900 | 579,100 | 646,900 | 560,400 |
1 See Advisory for production by product type.
2 Non-GAAP financial measure or contains a non-GAAP financial measure. See Advisory.
Fourth-quarter results
Operating1
Cenovus’s total revenues were $12.8 billion in the fourth quarter, down from $13.8 billion in the previous quarter, primarily due to lower commodity prices. Upstream revenues were $7.3 billion, flat from the third quarter, while Downstream revenues were $7.8 billion, down from $8.8 billion in the prior quarter.
Total operating margin3 was $2.3 billion, compared with $2.4 billion in the previous quarter. Upstream operating margin4 was $2.7 billion, consistent with the third quarter and benefiting from higher production volumes relative to the prior quarter, offset by lower benchmark oil prices and timing differences between production and sales. The company had a Downstream operating margin4 shortfall of $396 million in the fourth quarter due to weak refining crack spreads and a narrow heavy oil price differential, compared with a shortfall of $323 million in the previous quarter. Operating margin in the U.S. Refining segment included $45 million of first in, first out (FIFO) losses and $128 million of turnaround expenses incurred during the Lima Refinery turnaround.
Total Upstream production was 816,000 BOE/d in the fourth quarter, an increase of 44,700 BOE/d from the prior quarter, reflecting record quarterly production from the company’s Oil Sands segment of 628,500 BOE/d. Christina Lake production was 251,400 bbls/d, compared with 211,800 bbls/d in the third quarter, as a result of completing planned turnaround activity in September. Foster Creek production was 195,200 bbls/d compared with 198,000 bbls/d in the third quarter, while Sunrise production increased to 53,100 bbls/d from 50,400 bbls/d in the third quarter as production from new well pads continued to ramp up. Production from the Lloydminster thermal assets declined slightly to 108,900 bbls/d, while Lloydminster conventional heavy oil output increased to 18,000 bbls/d from 16,300 bbls/d in the prior quarter. Production in the Conventional segment was 117,800 BOE/d, a slight decrease from 118,100 BOE/d in the third quarter.
In the Offshore segment, production was 69,700 BOE/d compared with 65,500 BOE/d in the third quarter. In Asia Pacific, production volumes were 62,200 BOE/d, higher than the previous quarter partially due to increased production at the MAC field in Indonesia and planned maintenance at Liwan in the third quarter. In the Atlantic, production was 7,500 bbls/d, a decrease from 9,000 bbls/d in the prior quarter due to unplanned downtime at the non-operated Terra Nova field. The SeaRose FPSO is on station and reconnected to the White Rose field, with production expected to resume by the end of February.
Total refining throughput in the fourth quarter was 666,700 bbls/d, up from 642,900 bbls/d in the third quarter. Throughput in Canadian Refining was 104,400 bbls/d, representing a utilization rate of 97%, compared with 99,400 bbls/d in the previous quarter. The increase was primarily due to returning to full rates following completion of turnaround activity at the Lloydminster Upgrader early in the third quarter.
CENOVUS ENERGY NEWS RELEASE | 2
In U.S. Refining, crude throughput was 562,300 bbls/d, representing a utilization rate of 92%, compared with 543,500 bbls/d in the third quarter. Throughput increased primarily due to improved reliability, partially offset by economic run cuts as market crack spreads weakened through the quarter. U.S. Refining revenues were $6.6 billion relative to $7.2 billion in the prior quarter due to lower refined product pricing. Market capture5 in the U.S. improved to 45% relative to 35% in the previous quarter primarily due to reduced inventory timing impacts (FIFO). Market capture in the fourth quarter was negatively impacted by the Lima Refinery turnaround, narrower heavy crude oil differentials, and a quarterly FIFO loss of $45 million.
3 Non-GAAP financial measure. Total operating margin is the total of Upstream operating margin plus Downstream operating margin. See Advisory.
4 Specified financial measure. See Advisory.
5 Contains a non-GAAP financial measure. See Advisory.
Financial
Cash from operating activities in the fourth quarter, which includes changes in non-cash working capital, was $2.0 billion, compared with $2.5 billion in the third quarter. Adjusted funds flow was $1.6 billion, compared with $2.0 billion in the prior quarter and there was a shortfall of excess free funds flow (EFFF) of $416 million, compared with $146 million in the prior quarter. Net earnings in the fourth quarter were $146 million, compared with $820 million in the previous quarter. Fourth-quarter financial results were impacted by lower benchmark prices relative to the third quarter including seasonally weak refining market crack spreads in the Chicago market.
Long-term debt, including the current portion, was $7.5 billion at December 31, 2024. Net debt increased from the prior quarter to $4.6 billion at December 31, 2024, primarily due to the shortfall in EFFF of $416 million and the redemption of $250 million of Cenovus Series 3 preferred shares on December 31, 2024, partially offset by a release of non-cash working capital. The company continues to steward toward net debt of $4.0 billion and returning 100% of EFFF to shareholders over time in accordance with its financial framework.
Growth projects and capital investments
In the Oil Sands segment, the Narrows Lake pipeline, which will connect the field to the Christina Lake processing facility, was mechanically completed in the fourth quarter. We plan to commence steam injection in the spring and the project remains on track for first oil mid-2025. At Sunrise, production continued to ramp up in the fourth quarter after the company brought two new well pads online in the third quarter. One additional well pad will be added in early 2025. The optimization project at Foster Creek is now 64% complete and remains on schedule for startup in 2026, with most modules and major pieces of equipment in place and pipe installation underway.
In the fourth quarter, the West White Rose project achieved mechanical completion of both the CGS and topsides, and work to prepare the seabed for installation of the CGS at the field location was also completed. The focus of the project in 2025 will be on the installation and commissioning of the platform. The West White Rose project is now approximately 88% complete and progressing on-schedule towards first oil in 2026.
Full-year results
In 2024, Cenovus’s total Upstream production averaged 797,200 BOE/d, compared with 778,700 BOE/d in 2023, including record annual volumes from the Oil Sands assets and a 5% increase in Offshore volumes. Oil Sands production was 610,700 BOE/d, including approximately 196,000 bbls/d at Foster Creek, a new annual high for the asset, and 234,200 bbls/d at Christina Lake, which successfully completed a turnaround in the third quarter. Full-year production from the Lloydminster thermal assets
CENOVUS ENERGY NEWS RELEASE | 3
was also an annual record at 111,500 bbls/d, compared with 104,100 bbls/d in 2023, reflecting a successful redevelopment program and well optimization. Sunrise production was 49,600 bbls/d compared with 48,900 bbls/d in 2023 and Lloydminster conventional heavy oil production increased to 17,600 bbls/d from 16,700 bbls/d in the previous year. Conventional production was 119,900 BOE/d, in line with 2023. Offshore total production was approximately 66,600 BOE/d, compared with 63,400 BOE/d in the prior year, with 2023 impacted by a temporary disconnection of a subsea umbilical in Liwan by a third-party vessel.
Total Downstream throughput averaged 646,900 bbls/d in 2024, a 15% increase from 560,400 bbls/d in 2023. Canadian Refining crude oil throughput was 90,500 bbls/d, compared to 100,700 bbls/d in 2023, as the Lloydminster Upgrader completed the largest turnaround in the asset’s history early in the third quarter of 2024. U.S. Refining crude oil throughput increased to 556,400 bbls/d in 2024 compared with 459,700 bbls/d in 2023, reflecting the first full year of production from Superior and Toledo within the Cenovus portfolio.
Total revenues were $54.3 billion in 2024 and total operating margin was $10.8 billion compared with revenues of $52.2 billion and total operating margin of $11.0 billion in 2023. The year-over-year increase in total revenues was largely due to higher production and narrowing heavy Canadian crude differentials following the startup of the Trans Mountain pipeline expansion project. Operating margin was slightly reduced due to narrower downstream crack spreads, higher turnaround costs and increased transportation and blending costs.
Cash from operating activities was $9.2 billion for 2024 compared with $7.4 billion in 2023. Adjusted funds flow was $8.2 billion and free funds flow was $3.1 billion. Total capital investment for 2024 was $5.0 billion, primarily directed to sustaining production at the company’s Upstream assets, the construction of the major Upstream growth projects including West White Rose and refining reliability initiatives. Full-year net earnings for 2024 were $3.1 billion compared with $4.1 billion in 2023, primarily due to lower commodity prices, foreign exchange losses and higher depreciation, depletion, amortization and exploration expense.
Organizational updates
As part of Cenovus’s ongoing management succession plans, the company is announcing the following leadership changes effective March 1.
Andrew Dahlin, currently Executive Vice-President (EVP), Natural Gas & Technical Services, will assume the role of EVP & Chief Operating Officer. Andrew has more than 30 years of industry experience, including 13 years with Cenovus and its predecessor companies.
Eric Zimpfer, currently Senior Vice-President (SVP), U.S. Refining, will become Cenovus’s Head of Downstream, based in Dublin, Ohio and reporting directly to Jon McKenzie. Eric has more than 20 years of U.S. refining experience. He will play an integral role in continuing to improve the reliability and competitiveness of the Downstream business.
John Soini, currently SVP, Major & Capital Projects, will become EVP, Upstream – Thermal & Atlantic Offshore. John has more than 25 years of experience in the energy and power industries.
Susan Anderson, currently SVP, People Services, will become SVP, Legal, General Counsel & Corporate Secretary. Susan has more than 30 years of oil and gas industry experience, with 20 years at Husky Energy in various roles that included Vice-President, Legal.
Reserves
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Cenovus’s proved and probable reserves are evaluated each year by independent qualified reserves evaluators. At the end of 2024, Cenovus’s total proved and total proved plus probable reserves were approximately 5.7 billion BOE and 8.5 billion BOE respectively, and total proved and total proved plus probable bitumen reserves were approximately 5.2 billion barrels and 7.7 billion barrels respectively. At year-end 2024, Cenovus had a proved reserves life index of approximately 19 years and a proved plus probable reserves life index of approximately 29 years.
More details about Cenovus’s reserves and other oil and gas information are available in the Advisory and the Management’s Discussion and Analysis (MD&A), Annual Information Form (AIF) and Annual Report on Form 40-F for the year ended December 31, 2024, available on SEDAR+ at sedarplus.ca, EDGAR at sec.gov and Cenovus’s website at cenovus.com under Investors.
Cenovus year-end disclosure documents
Today, Cenovus is filing its interim and audited Consolidated Financial Statements, MD&A and AIF with Canadian securities regulatory authorities. The company is also filing its Annual Report on Form 40-F for the year ended December 31, 2024 with the U.S. Securities and Exchange Commission. Copies of these documents will be available on SEDAR+ at sedarplus.ca, EDGAR at sec.gov and the company's website at cenovus.com under Investors. They can also be requested free of charge by emailing investor.relations@cenovus.com.
Dividend declarations and share purchases
The Board of Directors has declared a quarterly base dividend of $0.180 per common share, payable on March 31, 2025 to shareholders of record as of March 14, 2025.
In addition, the Board has declared a quarterly dividend on each of the Cumulative Redeemable First Preferred Shares – Series 1, Series 2, Series 5 and Series 7 – payable on March 31, 2025 to shareholders of record as of March 14, 2025 as follows:
Preferred shares dividend summary
| Share series | Rate (%) | Amount ($/share) |
|---|---|---|
| Series 1 | 2.577 | 0.16106 |
| Series 2 | 5.211 | 0.32123 |
| Series 5 | 4.591 | 0.28694 |
| Series 7 | 3.935 | 0.24594 |
All dividends paid on Cenovus’s common and preferred shares will be designated as “eligible dividends” for Canadian federal income tax purposes. Declaration of dividends is at the sole discretion of the Board and will continue to be evaluated on a quarterly basis.
In the fourth quarter, the company returned $706 million to shareholders, composed of $108 million from its purchase of 4.6 million shares through its normal course issuer bid (NCIB), $348 million through common and preferred share dividends and $250 million through the redemption of Cenovus Series 3 preferred shares. In 2024, Cenovus returned $3.2 billion to shareholders, including $1.4 billion of share purchases through its NCIB, $1.6 billion in common and preferred share dividends, and $250 million through the redemption of the Series 3 preferred shares.
2025 planned maintenance
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The following table provides details on planned maintenance activities at Cenovus assets in 2025 and anticipated production or throughput impacts.
Potential quarterly production/throughput impact (Mbbls/d or MBOE/d)
| (MBOE/d or Mbbls/d) | Q1 | Q2 | Q3 | Q4 | Annualized impact |
|---|---|---|---|---|---|
| Upstream | |||||
| Oil Sands | - | 30 - 40 | 5 - 7 | - | 10 - 12 |
| Offshore | - | - | 4 - 6 | - | 1 - 2 |
| Conventional | - | - | - | - | - |
| Downstream | |||||
| Canadian Refining | - | - | - | - | - |
| U.S. Refining | 7 - 10 | 35 - 45 | 2 - 4 | 6 - 10 | 13 - 17 |
Potential turnaround expenses
| ($ millions) | Q1 | Q2 | Q3 | Q4 | Annualized impact |
|---|---|---|---|---|---|
| Downstream | |||||
| Canadian Refining | - | - | - | - | - |
| U.S. Refining | 110 - 135 | 210 - 240 | 80 - 95 | 40 - 50 | 440 - 520 |
Conference call today
9 a.m. Mountain Time (11 a.m. Eastern Time)
Cenovus will host a conference call today, February 20, 2025, starting at 9 a.m. MT (11 a.m. ET).
To join the conference call, please dial 1-800-206-4400 (toll-free in North America) or 1-289-514-5005 to reach a live operator who will join you into the call. A live audio webcast will also be available and archived for approximately 30 days.
Advisory
Basis of Presentation
Cenovus reports financial results in Canadian dollars and presents production volumes on a net to Cenovus before royalties basis, unless otherwise stated. Cenovus prepares its financial statements in accordance with International Financial Reporting Standards (IFRS) Accounting Standards.
Barrels of Oil Equivalent
Natural gas volumes have been converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (Mcf) to one barrel (bbl). BOE may be misleading, particularly if used in isolation. A conversion
CENOVUS ENERGY NEWS RELEASE | 6
ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil compared with natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is not an accurate reflection of value.
Reserves Life Index
Reserves life index is calculated based on reserves for the applicable reserves category divided by annual production.
Product types
| Product type by operating segment | Three months ended<br><br>December 31, 2024 | Full year ended December 31, 2024 |
|---|---|---|
| Oil Sands | ||
| Bitumen (Mbbls/d) | 608.6 | 591.3 |
| Heavy crude oil (Mbbls/d) | 18.0 | 17.6 |
| Conventional natural gas (MMcf/d) | 11.8 | 11.1 |
| Total Oil Sands segment production (MBOE/d) | 628.5 | 610.7 |
| Conventional | ||
| Light crude oil (Mbbls/d) | 4.8 | 4.9 |
| Natural gas liquids (Mbbls/d) | 19.7 | 21.0 |
| Conventional natural gas (MMcf/d) | 560.5 | 563.8 |
| Total Conventional segment production (MBOE/d) | 117.8 | 119.9 |
| Offshore | ||
| Light crude oil (Mbbls/d) | 7.5 | 8.0 |
| Natural gas liquids (Mbbls/d) | 12.0 | 11.0 |
| Conventional natural gas (MMcf/d) | 301.0 | 285.3 |
| Total Offshore segment production (MBOE/d) | 69.7 | 66.6 |
| Total Upstream production (MBOE/d) | 816.0 | 797.2 |
Forward‐looking Information
This news release contains certain forward‐looking statements and forward‐looking information (collectively referred to as “forward‐looking information”) within the meaning of applicable securities legislation about Cenovus’s current expectations, estimates and projections about the future of the company, based on certain assumptions made in light of the company’s experiences and perceptions of historical trends. Although Cenovus believes that the expectations represented by such forward‐looking information are reasonable, there can be no assurance that such expectations will prove to be correct.
Forward‐looking information in this document is identified by words such as “anticipate”, “continue”, “deliver”, “focus”, “plan”, “progress”, “steward”, “target” and “will” or similar expressions and includes suggestions of future outcomes, including, but not limited to, statements about: Net Debt; returning Excess Free Funds Flow to shareholders; growth plans and projects; delivering long-term shareholder value; production guidance; the optimization project at Foster Creek; steam injection and timing of production at Narrows Lake; production and timing of well pads at Sunrise; installation and commissioning of the Sea Rose FPSO and return of production at White Rose; the installation and commissioning of, and timing of first oil from, the West White Rose project; 2025 planned maintenance; and dividend payments.
CENOVUS ENERGY NEWS RELEASE | 7
Developing forward‐looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus and others that apply to the industry generally. The factors or assumptions on which the forward‐looking information in this news release are based include, but are not limited to: the allocation of free funds flow; commodity prices, inflation and supply chain constraints; Cenovus’s ability to produce on an unconstrained basis; Cenovus’s ability to access sufficient insurance coverage to pursue development plans; Cenovus’s ability to deliver safe and reliable operations and demonstrate strong governance; and the assumptions inherent in Cenovus’s 2025 corporate guidance available on cenovus.com.
The risk factors and uncertainties that could cause actual results to differ materially from the forward‐looking information in this news release include, but are not limited to: the accuracy of estimates regarding commodity production and operating expenses, inflation, taxes, royalties, capital costs and currency and interest rates; risks inherent in the operation of Cenovus’s business; and risks associated with climate change and Cenovus’s assumptions relating thereto and other risks identified under “Risk Management and Risk Factors” and “Advisory” in Cenovus’s Management’s Discussion and Analysis (MD&A) for the year ended December 31, 2024.
Except as required by applicable securities laws, Cenovus disclaims any intention or obligation to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. Events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward‐looking information. For additional information regarding Cenovus’s material risk factors, the assumptions made, and risks and uncertainties which could cause actual results to differ from the anticipated results, refer to “Risk Management and Risk Factors” and “Advisory” in Cenovus’s MD&A for the periods ended December 31, 2024, and to the risk factors, assumptions and uncertainties described in other documents Cenovus files from time to time with securities regulatory authorities in Canada (available on SEDAR+ at sedarplus.ca, on EDGAR at sec.gov and Cenovus’s website at cenovus.com).
Specified Financial Measures
This news release contains references to certain specified financial measures that do not have standardized meanings prescribed by IFRS Accounting Standards. Readers should not consider these measures in isolation or as a substitute for analysis of the company’s results as reported under IFRS Accounting Standards. These measures are defined differently by different companies and, therefore, might not be comparable to similar measures presented by other issuers. For information on the composition of these measures, as well as an explanation of how the company uses these measures, refer to the Specified Financial Measures Advisory located in Cenovus’s MD&A for the period ended December 31, 2024 (available on SEDAR+ at sedarplus.ca, on EDGAR at sec.gov and on Cenovus's website at cenovus.com) which is incorporated by reference into this news release.
Upstream Operating Margin and Downstream Operating Margin
Upstream Operating Margin and Downstream Operating Margin, and the individual components thereof, are included in Note 1 to the interim Consolidated Financial Statements.
Total Operating Margin
Total Operating Margin is the total of Upstream Operating Margin plus Downstream Operating Margin.
CENOVUS ENERGY NEWS RELEASE | 8
| Upstream (6) | Downstream (6) | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ millions) | Q4 2024 | Q3 2024 | Q4 2023 | Q4 2024 | Q3 2024 | Q4 2023 | Q4 2024 | Q3 2024 | Q4 2023 |
| Revenues | |||||||||
| Gross Sales | 8,240 | 8,259 | 7,797 | 7,837 | 8,798 | 8,404 | 16,077 | 17,057 | 16,201 |
| Less: Royalties | (914) | (929) | (902) | — | — | — | (914) | (929) | (902) |
| 7,326 | 7,330 | 6,895 | 7,837 | 8,798 | 8,404 | 15,163 | 16,128 | 15,299 | |
| Expenses | |||||||||
| Purchased Product | 1,000 | 1,088 | 663 | 7,364 | 8,207 | 7,888 | 8,364 | 9,295 | 8,551 |
| Transportation and Blending | 2,816 | 2,661 | 2,894 | — | — | — | 2,816 | 2,661 | 2,894 |
| Operating | 842 | 860 | 864 | 866 | 918 | 826 | 1,708 | 1,778 | 1,690 |
| Realized (Gain) Loss on Risk Management | (2) | (10) | 19 | 3 | (4) | (6) | 1 | (14) | 13 |
| Operating Margin | 2,670 | 2,731 | 2,455 | (396) | (323) | (304) | 2,274 | 2,408 | 2,151 |
6Found in the December 31, 2024, or the September 30, 2024, interim Consolidated Financial Statements. Revenues and purchased product for Q3 2024 Downstream operations were revised. See note 25 of our December 31, 2024, interim consolidated financial statements.
| ($ millions) | Upstream (6) | Downstream (6) | Total | |||
|---|---|---|---|---|---|---|
| Year ended December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
| Revenues | ||||||
| Gross Sales | 33,078 | 31,082 | 33,618 | 32,626 | 66,696 | 63,708 |
| Less: Royalties | (3,449) | (3,270) | — | — | (3,449) | (3,270) |
| 29,629 | 27,812 | 33,618 | 32,626 | 63,247 | 60,438 | |
| Expenses | ||||||
| Purchased Product | 3,674 | 3,152 | 30,252 | 28,273 | 33,926 | 31,425 |
| Transportation and Blending | 11,331 | 11,088 | — | — | 11,331 | 11,088 |
| Operating | 3,489 | 3,690 | 3,670 | 3,201 | 7,159 | 6,891 |
| Realized (Gain) Loss on Risk Management | 14 | 12 | 8 | — | 22 | 12 |
| Operating Margin | 11,121 | 9,870 | (312) | 1,152 | 10,809 | 11,022 |
Adjusted Funds Flow, Free Funds Flow and Excess Free Funds Flow
The following table provides a reconciliation of cash from (used in) operating activities found in Cenovus’s Consolidated Financial Statements to Adjusted Funds Flow, Free Funds Flow and Excess Free Funds Flow. Adjusted Funds Flow per Share – Basic and Adjusted Funds Flow per Share – Diluted are calculated by dividing Adjusted Funds Flow by the respective basic or diluted weighted average number of common shares outstanding during the period and may be useful to evaluate a company’s ability to generate cash.
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| Three Months Ended | Twelve Months Ended | ||||
|---|---|---|---|---|---|
| ($ millions) | December 31, 2024 | September 30, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Cash From (Used in) Operating Activities (7) | 2,029 | 2,474 | 2,946 | 9,235 | 7,388 |
| (Add) Deduct: | |||||
| Settlement of Decommissioning Liabilities | (64) | (74) | (65) | (234) | (222) |
| Net Change in Non-Cash Working Capital | 492 | 588 | 949 | 1,305 | (1,193) |
| Adjusted Funds Flow | 1,601 | 1,960 | 2,062 | 8,164 | 8,803 |
| Capital Investment | 1,478 | 1,346 | 1,170 | 5,015 | 4,298 |
| Free Funds Flow | 123 | 614 | 892 | 3,149 | 4,505 |
| Add (Deduct): | |||||
| Base Dividends Paid on Common Shares | (330) | (329) | (261) | (1,255) | (990) |
| Purchase of Common Shares under Employee Benefit Plan | (43) | — | — | (43) | — |
| Dividends Paid on Preferred Shares | (18) | (9) | (9) | (45) | (36) |
| Settlement of Decommissioning Liabilities | (64) | (74) | (65) | (234) | (222) |
| Principal Repayment of Leases | (80) | (74) | (72) | (299) | (288) |
| Acquisitions, Net of Cash Acquired | (3) | (4) | (14) | (22) | (515) |
| Proceeds From Divestitures | (1) | 22 | — | 46 | 12 |
| Excess Free Funds Flow | (416) | 146 | 471 | 1,297 | 2,466 |
7 Found in the December 31, 2024, or the September 30, 2024, interim Consolidated Financial Statements.
Market Capture
Market Capture contains a non-GAAP financial measure and is used in the company’s U.S. Refining segment to provide an indication of margin captured relative to what was available in the market based on widely-used benchmarks. We define Market Capture as Refining Margin divided by the weighted average 3-2-1 market benchmark crack, net of RINs, expressed as a percentage. The weighted average crack spread, net of RINs, is calculated on Cenovus’s operable capacity-weighted average of the Chicago and Group 3 3-2-1 benchmark market crack spreads, net of RINs.
CENOVUS ENERGY NEWS RELEASE | 10
| ($ millions) | Three months ended<br><br>December 31, 2024 | Three months ended<br><br>September 30, 2024 |
|---|---|---|
| Revenues (8) | 6,574 | 7,218 |
| Purchased Product (8) | 6,296 | 6,854 |
| Gross Margin | 278 | 364 |
| Total Processed Inputs (Mbbls/d) | 588.4 | 568.0 |
| Refining Margin ($/bbl) | 5.14 | 6.97 |
| Operable Capacity (Mbbls/d) | 612.3 | 612.3 |
| Operable Capacity by Regional Benchmark (percent) | ||
| Chicago 3-2-1 Crack Spread Weighting | 81 | 81 |
| Group 3 3-2-1 Crack Spread Weighting | 19 | 19 |
| Benchmark Prices and Exchange Rate | ||
| Chicago 3-2-1 Crack Spread (US$/bbl) | 12.12 | 18.62 |
| Group 3 3-2-1 Crack Spread (US$/bbl) | 12.66 | 18.95 |
| RINs (US$/bbl) | 4.02 | 3.89 |
| US$ per C$1 - Average | 0.715 | 0.733 |
| Weighted Average Crack Spread, Net of RINs ($/bbl) | 11.47 | 20.18 |
| Market Capture (percent) | 45 | 35 |
8 Found in Note 1 of the December 31, 2024, or the September 30, 2024, interim Consolidated Financial Statements. For the three months ended September 30, 2024, amounts reflect certain revisions. See Note 25 of our December 31, 2024, interim consolidated financial statements.
Cenovus Energy Inc.
Cenovus Energy Inc. is an integrated energy company with oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States. The company is focused on managing its assets in a safe, innovative and cost-efficient manner, integrating environmental, social and governance considerations into its business plans. Cenovus common shares and warrants are listed on the Toronto and New York stock exchanges, and the company’s preferred shares are listed on the Toronto Stock Exchange. For more information, visit cenovus.com.
Find Cenovus on Facebook, LinkedIn, YouTube and Instagram.
Cenovus contacts
Investors
Investor Relations general line
403-766-7711
Media
Media Relations general line
403-766-7751
CENOVUS ENERGY NEWS RELEASE | 11
Document
Exhibit 99.2
Cenovus Energy Inc.
Interim Consolidated Financial Statements (unaudited)
For the Periods Ended December 31, 2024
(Canadian Dollars)
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
| For the periods ended December 31, 2024 | |||
|---|---|---|---|
| TABLE OF CONTENTS | |||
| --- | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) | 3 | |
| --- | --- | ||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | 4 | ||
| CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) | 5 | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | 6 | ||
| NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) | 7 | ||
| 1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES | 7 | ||
| 2.BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE | 14 | ||
| 3. UPDATE TO ACCOUNTING POLICIES | 15 | ||
| 4. FINANCE COSTS, NET | 15 | ||
| 5. FOREIGN EXCHANGE (GAIN) LOSS, NET | 16 | ||
| 6. DIVESTITURES | 16 | ||
| 7. IMPAIRMENT CHARGES AND REVERSALS | 16 | ||
| 8. INCOME TAXES | 18 | ||
| 9. PER SHARE AMOUNTS | 18 | ||
| 10. EXPLORATION AND EVALUATION ASSETS, NET | 19 | ||
| 11. PROPERTY, PLANT AND EQUIPMENT, NET | 20 | ||
| 12. LEASES | 20 | ||
| 13. DEBT AND CAPITAL STRUCTURE | 21 | ||
| 14. CONTINGENT PAYMENTS | 23 | ||
| 15. DECOMMISSIONING LIABILITIES | 23 | ||
| 16. OTHER LIABILITIES | 24 | ||
| 17. SHARE CAPITAL AND WARRANTS | 24 | ||
| 18. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 26 | ||
| 19. STOCK-BASED COMPENSATION PLANS | 26 | ||
| 20. RELATED PARTY TRANSACTIONS | 27 | ||
| 21. FINANCIAL INSTRUMENTS | 27 | ||
| 22. RISK MANAGEMENT | 29 | ||
| 23. SUPPLEMENTARY CASH FLOW INFORMATION | 31 | ||
| 24. COMMITMENTS AND CONTINGENCIES | 32 | ||
| 25. PRIOR PERIOD REVISIONS | 33 | ||
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 2 | ||
| --- | --- | ||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) | |||
| --- |
For the periods ended December 31,
($ millions, except per share amounts)
| Three Months Ended | Twelve Months Ended | ||||
|---|---|---|---|---|---|
| Notes | 2024 | 2023 | 2024 (1) | 2023 | |
| Revenues (2) | 1 | 12,813 | 13,134 | 54,277 | 52,204 |
| Expenses | 1 | ||||
| Purchased Product, Transportation and Blending (2) | 8,906 | 9,220 | 36,641 | 34,856 | |
| Operating | 1,627 | 1,563 | 6,841 | 6,352 | |
| (Gain) Loss on Risk Management | 21 | 16 | (28) | 58 | 61 |
| Depreciation, Depletion, Amortization and Exploration<br><br>Expense (2) | 10,11,12 | 1,238 | 1,302 | 4,940 | 4,686 |
| (Income) Loss From Equity-Accounted Affiliates | (18) | (28) | (66) | (51) | |
| General and Administrative | 201 | 71 | 794 | 688 | |
| Finance Costs, Net (2) | 4 | 120 | 145 | 514 | 538 |
| Integration, Transaction and Other Costs | 53 | 36 | 166 | 85 | |
| Foreign Exchange (Gain) Loss, Net | 5 | 381 | (74) | 462 | (67) |
| (Gain) Loss on Divestiture of Assets (2) | 6 | 2 | (2) | (119) | 20 |
| Re-measurement of Contingent Payments | 14 | — | (24) | 30 | 59 |
| Other (Income) Loss, Net | 103 | (21) | (55) | (63) | |
| Earnings (Loss) Before Income Tax | 184 | 974 | 4,071 | 5,040 | |
| Income Tax Expense (Recovery) | 8 | 38 | 231 | 929 | 931 |
| Net Earnings (Loss) | 146 | 743 | 3,142 | 4,109 | |
| Other Comprehensive Income (Loss), Net of Tax | 18 | ||||
| Items That Will not be Reclassified to Profit or Loss: | |||||
| Actuarial Gain (Loss) Relating to Pension and Other<br><br>Post-Employment Benefits | 3 | (59) | 14 | (44) | |
| Change in the Fair Value of Equity Instruments at<br><br>FVOCI (3) | 21 | (52) | 56 | 71 | 56 |
| Items That may be Reclassified to Profit or Loss: | |||||
| Foreign Currency Translation Adjustment | 801 | (243) | 1,020 | (274) | |
| Total Other Comprehensive Income (Loss), Net of Tax | 752 | (246) | 1,105 | (262) | |
| Comprehensive Income (Loss) | 898 | 497 | 4,247 | 3,847 | |
| Net Earnings (Loss) Per Common Share ($) | 9 | ||||
| Basic | 0.08 | 0.39 | 1.68 | 2.15 | |
| Diluted | 0.07 | 0.32 | 1.67 | 2.09 |
(1)For the twelve months ended December 31, 2024, amounts reflect certain revisions. See Note 25.
(2)Revised presentation as of January 1, 2024. See Note 3.
(3)Fair value through other comprehensive income (loss) (“FVOCI”).
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 3 |
|---|---|
| CONSOLIDATED BALANCE SHEETS (unaudited) | |
| --- |
As at December 31,
($ millions)
| Notes | 2024 | 2023 | |
|---|---|---|---|
| Assets | |||
| Current Assets | |||
| Cash and Cash Equivalents | 3,093 | 2,227 | |
| Accounts Receivable and Accrued Revenues | 2,614 | 3,035 | |
| Income Tax Receivable | 231 | 416 | |
| Inventories | 4,496 | 4,030 | |
| Total Current Assets | 10,434 | 9,708 | |
| Restricted Cash | 15 | 241 | 211 |
| Exploration and Evaluation Assets, Net | 1,10 | 484 | 738 |
| Property, Plant and Equipment, Net | 1,11 | 38,568 | 37,250 |
| Right-of-Use Assets, Net | 1,12 | 1,950 | 1,680 |
| Income Tax Receivable | 25 | 25 | |
| Investments in Equity-Accounted Affiliates | 399 | 366 | |
| Other Assets | 451 | 318 | |
| Deferred Income Taxes | 1,064 | 696 | |
| Goodwill | 1 | 2,923 | 2,923 |
| Total Assets | 56,539 | 53,915 | |
| Liabilities and Equity | |||
| Current Liabilities | |||
| Accounts Payable and Accrued Liabilities | 6,242 | 5,480 | |
| Income Tax Payable | 396 | 88 | |
| Short-Term Borrowings | 13 | 173 | 179 |
| Long-Term Debt | 13 | 192 | — |
| Lease Liabilities | 12 | 359 | 299 |
| Contingent Payments | 14 | — | 164 |
| Total Current Liabilities | 7,362 | 6,210 | |
| Long-Term Debt | 13 | 7,342 | 7,108 |
| Lease Liabilities | 12 | 2,568 | 2,359 |
| Decommissioning Liabilities | 15 | 4,534 | 4,155 |
| Other Liabilities | 16 | 919 | 1,183 |
| Deferred Income Taxes | 4,045 | 4,188 | |
| Total Liabilities | 26,770 | 25,203 | |
| Shareholders’ Equity | 29,754 | 28,698 | |
| Non-Controlling Interest | 15 | 14 | |
| Total Liabilities and Equity | 56,539 | 53,915 | |
| Commitments and Contingencies | 24 |
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 4 |
|---|---|
| CONSOLIDATED STATEMENTS OF EQUITY (unaudited) | |
| --- |
($ millions)
| Shareholders’ Equity | ||||||||
|---|---|---|---|---|---|---|---|---|
| Common Shares | Treasury<br>Shares | Preferred Shares | Warrants | Paid in<br><br>Surplus | Retained<br><br>Earnings | AOCI (1) | Total | |
| (Note 17) | (Note 17) | (Note 17) | (Note 17) | (Note 18) | ||||
| As at December 31, 2022 | 16,320 | — | 519 | 184 | 2,691 | 6,392 | 1,470 | 27,576 |
| Net Earnings (Loss) | — | — | — | — | — | 4,109 | — | 4,109 |
| Other Comprehensive Income <br>(Loss), Net of Tax | — | — | — | — | — | — | (262) | (262) |
| Total Comprehensive Income (Loss) | — | — | — | — | — | 4,109 | (262) | 3,847 |
| Common Shares Issued Under<br>Stock Option Plans | 58 | — | — | — | (12) | — | — | 46 |
| Purchase of Common Shares Under<br><br>NCIB (2) | (373) | — | — | — | (688) | — | — | (1,061) |
| Warrants Exercised | 26 | — | — | (8) | — | — | — | 18 |
| Warrants Purchased and Cancelled | — | — | — | (151) | — | (562) | — | (713) |
| Stock-Based Compensation<br>Expense | — | — | — | — | 11 | — | — | 11 |
| Base Dividends on Common Shares | — | — | — | — | — | (990) | — | (990) |
| Dividends on Preferred Shares | — | — | — | — | — | (36) | — | (36) |
| As at December 31, 2023 | 16,031 | — | 519 | 25 | 2,002 | 8,913 | 1,208 | 28,698 |
| Net Earnings (Loss) | — | — | — | — | — | 3,142 | — | 3,142 |
| Other Comprehensive Income<br>(Loss), Net of Tax | — | — | — | — | — | — | 1,105 | 1,105 |
| Total Comprehensive Income (Loss) | — | — | — | — | — | 3,142 | 1,105 | 4,247 |
| Common Shares Issued Under<br>Stock Option Plans | 68 | — | — | — | (16) | — | — | 52 |
| Purchase of Common Shares Under<br><br>NCIB (2) | (479) | — | — | — | (966) | — | — | (1,445) |
| Purchase of Common Shares Under<br>Employee Benefit Plan | — | (43) | — | — | — | — | — | (43) |
| Preferred Shares Redeemed | — | — | (163) | — | (87) | — | — | (250) |
| Warrants Exercised | 39 | — | — | (13) | — | — | — | 26 |
| Stock-Based Compensation<br>Expense | — | — | — | — | 11 | — | — | 11 |
| Base Dividends on Common Shares | — | — | — | — | — | (1,255) | — | (1,255) |
| Variable Dividends on Common<br>Shares | — | — | — | — | — | (251) | — | (251) |
| Dividends on Preferred Shares | — | — | — | — | — | (36) | — | (36) |
| As at December 31, 2024 | 15,659 | (43) | 356 | 12 | 944 | 10,513 | 2,313 | 29,754 |
(1)Accumulated other comprehensive income (loss) (“AOCI”).
(2)Normal course issuer bid (“NCIB”). For the period ended December 31, 2024, amount includes taxes payable on purchase of shares.
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 5 |
|---|---|
| CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | |
| --- |
For the periods ended December 31,
($ millions)
| Three Months Ended | Twelve Months Ended | ||||
|---|---|---|---|---|---|
| Notes | 2024 | 2023 | 2024 | 2023 | |
| Operating Activities | |||||
| Net Earnings (Loss) | 146 | 743 | 3,142 | 4,109 | |
| Depreciation, Depletion and Amortization | 11,12 | 1,225 | 1,270 | 4,871 | 4,644 |
| Deferred Income Tax Expense (Recovery) | 8 | (350) | 166 | (474) | (250) |
| Unrealized (Gain) Loss on Risk Management | 21 | (19) | (36) | 12 | 52 |
| Unrealized Foreign Exchange (Gain) Loss | 5 | 449 | (111) | 550 | (210) |
| Realized Foreign Exchange (Gain) Loss on Non-Operating Items | — | — | — | 98 | |
| (Gain) Loss on Divestiture of Assets (1) | 6 | 2 | (2) | (119) | 20 |
| Re-measurement of Contingent Payments | 14 | — | (24) | 30 | 59 |
| Unwinding of Discount on Decommissioning Liabilities | 15 | 56 | 55 | 225 | 220 |
| (Income) Loss From Equity-Accounted Affiliates | (18) | (28) | (66) | (51) | |
| Distributions Received From Equity-Accounted Affiliates | 20 | 39 | 32 | 172 | 149 |
| Stock-Based Compensation, Net of Payments | (2) | (102) | (145) | (12) | |
| Other | 73 | 99 | (34) | (25) | |
| Settlement of Decommissioning Liabilities | 15 | (64) | (65) | (234) | (222) |
| Net Change in Non-Cash Working Capital | 23 | 492 | 949 | 1,305 | (1,193) |
| Cash From (Used in) Operating Activities | 2,029 | 2,946 | 9,235 | 7,388 | |
| Investing Activities | |||||
| Acquisitions, Net of Cash Acquired | (3) | (14) | (22) | (515) | |
| Capital Investment | 1 | (1,478) | (1,170) | (5,015) | (4,298) |
| Proceeds From Divestitures | 6 | (1) | — | 46 | 12 |
| Net Change in Investments and Other | (17) | (24) | (80) | (125) | |
| Net Change in Non-Cash Working Capital | 23 | (14) | (72) | (55) | (369) |
| Cash From (Used in) Investing Activities | (1,513) | (1,280) | (5,126) | (5,295) | |
| Net Cash Provided (Used) Before Financing Activities | 516 | 1,666 | 4,109 | 2,093 | |
| Financing Activities | 23 | ||||
| Net Issuance (Repayment) of Short-Term Borrowings | 79 | 159 | 5 | 58 | |
| Repayment of Long-Term Debt | — | — | — | (1,346) | |
| Principal Repayment of Leases | 12 | (80) | (72) | (299) | (288) |
| Common Shares Issued Under Stock Option Plans | 1 | 3 | 52 | 46 | |
| Purchase of Common Shares Under NCIB | 17 | (108) | (350) | (1,445) | (1,061) |
| Purchase of Common Shares Under Employee Benefit Plan | 17 | (43) | — | (43) | — |
| Redemption of Preferred Shares | 17 | (250) | — | (250) | — |
| Payment for Purchase of Warrants | — | (111) | — | (711) | |
| Proceeds From Exercise of Warrants | 1 | 2 | 26 | 18 | |
| Dividends Paid | 9 | (348) | (270) | (1,551) | (1,026) |
| Other | 7 | — | — | (3) | |
| Cash From (Used in) Financing Activities | (741) | (639) | (3,505) | (4,313) | |
| Effect of Foreign Exchange on Cash and Cash Equivalents | 214 | (62) | 262 | (77) | |
| Increase (Decrease) in Cash and Cash Equivalents | (11) | 965 | 866 | (2,297) | |
| Cash and Cash Equivalents, Beginning of Period | 3,104 | 1,262 | 2,227 | 4,524 | |
| Cash and Cash Equivalents, End of Period | 3,093 | 2,227 | 3,093 | 2,227 |
(1)Revised presentation as of January 1, 2024. See Note 3.
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 6 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES |
|---|
Cenovus Energy Inc. (“Cenovus” or the “Company”) is an integrated energy company with crude oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States (“U.S.”).
Cenovus is incorporated under the Canada Business Corporations Act and its common shares and common share purchase warrants are listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange. Cenovus’s cumulative redeemable preferred shares series 1, 2, 5 and 7 are listed on the TSX. The executive and registered office is located at 4100, 225 6 Avenue S.W., Calgary, Alberta, Canada, T2P 1N2. Information on the Company’s basis of preparation for these interim Consolidated Financial Statements is found in Note 2.
Management has determined the operating segments based on information regularly reviewed for the purposes of decision making, allocating resources and assessing operational performance by Cenovus’s chief operating decision maker. The Company’s operating segments are aggregated based on their geographic locations, the nature of the businesses or a combination of these factors. The Company evaluates the financial performance of its operating segments primarily based on operating margin.
The Company operates through the following reportable segments:
Upstream Segments
•Oil Sands, includes the development and production of bitumen and heavy oil in northern Alberta and Saskatchewan. Cenovus’s oil sands assets include Foster Creek, Christina Lake, Sunrise, Lloydminster thermal and Lloydminster conventional heavy oil assets. Cenovus jointly owns and operates pipeline gathering systems and terminals through the equity-accounted investment in Husky Midstream Limited Partnership (“HMLP”). The sale and transportation of Cenovus’s production and third-party commodity trading volumes are managed and marketed through access to capacity on third-party pipelines and storage facilities in both Canada and the U.S. to optimize product mix, delivery points, transportation commitments and customer diversification.
•Conventional, includes assets rich in natural gas liquids (“NGLs”) and natural gas in Alberta and British Columbia in the Edson, Clearwater and Rainbow Lake operating areas, in addition to the Northern Corridor, which includes Elmworth and Wapiti. The segment also includes interests in numerous natural gas processing facilities. Cenovus’s NGLs and natural gas production is marketed and transported, with additional third-party commodity trading volumes, through access to capacity on third-party pipelines, export terminals and storage facilities. These provide flexibility for market access to optimize product mix, delivery points, transportation commitments and customer diversification.
•Offshore, includes offshore operations, exploration and development activities in the east coast of Canada and the Asia Pacific region, representing China and the equity-accounted investment in Husky-CNOOC Madura Ltd. (“HCML”), which is engaged in the exploration for and production of NGLs and natural gas in offshore Indonesia.
Downstream Segments
•Canadian Refining, includes the owned and operated Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt and other ancillary products. Cenovus also owns and operates the Bruderheim crude-by-rail terminal and two ethanol plants. The Company’s commercial fuels business across Canada is included in this segment. Cenovus markets its production and third-party commodity trading volumes in an effort to use its integrated network of assets to maximize value.
•U.S. Refining, includes the refining of crude oil to produce gasoline, diesel, jet fuel, asphalt and other products at the wholly-owned Lima, Superior and Toledo refineries. The U.S. Refining segment also includes the jointly-owned Wood River and Borger refineries, held through WRB Refining LP (“WRB”), a jointly-owned entity with operator Phillips 66. Cenovus markets some of its own and third-party refined products including gasoline, diesel, jet fuel and asphalt.
Corporate and Eliminations
Corporate and Eliminations, includes Cenovus-wide costs for general and administrative, financing activities, gains and losses on risk management for corporate related derivative instruments and foreign exchange. Eliminations include adjustments for feedstock and internal usage of crude oil, natural gas, condensate, other NGLs and refined products between segments; transloading services provided to the Oil Sands segment by the Company’s crude-by-rail terminal; the sale of condensate extracted from blended crude oil production in the Canadian Refining segment and sold to the Oil Sands segment; and unrealized profits in inventory. Eliminations are recorded based on market prices.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 7 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
A) Results of Operations – Segment and Operational Information
i) Results for the Three Months Ended December 31
| Upstream | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended | Oil Sands | Conventional | Offshore | Total | ||||||||||||
| December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||
| Gross Sales | ||||||||||||||||
| External Sales | 5,332 | 4,954 | 345 | 328 | 373 | 514 | 6,050 | 5,796 | ||||||||
| Intersegment Sales | 1,759 | 1,523 | 431 | 478 | — | — | 2,190 | 2,001 | ||||||||
| 7,091 | 6,477 | 776 | 806 | 373 | 514 | 8,240 | 7,797 | |||||||||
| Royalties | (874) | (841) | (15) | (27) | (25) | (34) | (914) | (902) | ||||||||
| Revenues | 6,217 | 5,636 | 761 | 779 | 348 | 480 | 7,326 | 6,895 | ||||||||
| Expenses | ||||||||||||||||
| Purchased Product | 530 | 226 | 470 | 437 | — | — | 1,000 | 663 | ||||||||
| Transportation and Blending | 2,735 | 2,809 | 79 | 78 | 2 | 7 | 2,816 | 2,894 | ||||||||
| Operating | 615 | 615 | 123 | 146 | 104 | 103 | 842 | 864 | ||||||||
| Realized (Gain) Loss on Risk<br> Management | (3) | 24 | 1 | (5) | — | — | (2) | 19 | ||||||||
| Operating Margin | 2,340 | 1,962 | 88 | 123 | 242 | 370 | 2,670 | 2,455 | ||||||||
| Unrealized (Gain) Loss on Risk<br><br>Management | (3) | (29) | (6) | (5) | — | — | (9) | (34) | ||||||||
| Depreciation, Depletion and<br> Amortization | 787 | 763 | 112 | 100 | 142 | 138 | 1,041 | 1,001 | ||||||||
| Exploration Expense | (4) | 15 | 1 | 6 | 16 | 11 | 13 | 32 | ||||||||
| (Income) Loss From Equity-<br> Accounted Affiliates | — | — | 1 | — | (19) | (28) | (18) | (28) | ||||||||
| Segment Income (Loss) | 1,560 | 1,213 | (20) | 22 | 103 | 249 | 1,643 | 1,484 | Downstream | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Canadian Refining | U.S. Refining | Total | ||||||||||||||
| For the three months ended December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||
| Gross Sales | ||||||||||||||||
| External Sales | 1,105 | 1,388 | 6,572 | 6,852 | 7,677 | 8,240 | ||||||||||
| Intersegment Sales | 158 | 169 | 2 | (5) | 160 | 164 | ||||||||||
| 1,263 | 1,557 | 6,574 | 6,847 | 7,837 | 8,404 | |||||||||||
| Royalties | — | — | — | — | — | — | ||||||||||
| Revenues | 1,263 | 1,557 | 6,574 | 6,847 | 7,837 | 8,404 | ||||||||||
| Expenses | ||||||||||||||||
| Purchased Product | 1,068 | 1,263 | 6,296 | 6,625 | 7,364 | 7,888 | ||||||||||
| Transportation and Blending | — | — | — | — | — | — | ||||||||||
| Operating | 148 | 168 | 718 | 658 | 866 | 826 | ||||||||||
| Realized (Gain) Loss on Risk Management | — | — | 3 | (6) | 3 | (6) | ||||||||||
| Operating Margin | 47 | 126 | (443) | (430) | (396) | (304) | ||||||||||
| Unrealized (Gain) Loss on Risk Management | — | — | 5 | (4) | 5 | (4) | ||||||||||
| Depreciation, Depletion and Amortization | 38 | 49 | 124 | 172 | 162 | 221 | ||||||||||
| Exploration Expense | — | — | — | — | — | — | ||||||||||
| (Income) Loss From Equity-Accounted Affiliates | — | — | — | — | — | — | ||||||||||
| Segment Income (Loss) | 9 | 77 | (572) | (598) | (563) | (521) | ||||||||||
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 8 | |||||||||||||||
| --- | --- |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| Corporate and Eliminations | Consolidated | ||||||
|---|---|---|---|---|---|---|---|
| For the three months ended December 31, | 2024 | 2023 | 2024 | 2023 | |||
| Gross Sales | |||||||
| External Sales | — | — | 13,727 | 14,036 | |||
| Intersegment Sales | (2,350) | (2,165) | — | — | |||
| (2,350) | (2,165) | 13,727 | 14,036 | ||||
| Royalties | — | — | (914) | (902) | |||
| Revenues | (2,350) | (2,165) | 12,813 | 13,134 | |||
| Expenses | |||||||
| Purchased Product | (2,067) | (1,993) | 6,297 | 6,558 | |||
| Transportation and Blending | (207) | (232) | 2,609 | 2,662 | |||
| Purchased Product, Transportation and Blending (1) | (2,274) | (2,225) | 8,906 | 9,220 | |||
| Operating | (81) | (127) | 1,627 | 1,563 | |||
| Realized (Gain) Loss on Risk Management | 34 | (5) | 35 | 8 | |||
| Unrealized (Gain) Loss on Risk Management | (15) | 2 | (19) | (36) | |||
| Depreciation, Depletion and Amortization | 22 | 48 | 1,225 | 1,270 | |||
| Exploration Expense | — | — | 13 | 32 | |||
| (Income) Loss From Equity-Accounted Affiliates | — | — | (18) | (28) | |||
| Segment Income (Loss) | (36) | 142 | 1,044 | 1,105 | |||
| General and Administrative | 201 | 71 | 201 | 71 | |||
| Finance Costs, Net (1) | 120 | 145 | 120 | 145 | |||
| Integration, Transaction and Other Costs | 53 | 36 | 53 | 36 | |||
| Foreign Exchange (Gain) Loss, Net | 381 | (74) | 381 | (74) | |||
| (Gain) Loss on Divestiture of Assets (1) | 2 | (2) | 2 | (2) | |||
| Re-measurement of Contingent Payments | — | (24) | — | (24) | |||
| Other (Income) Loss, Net | 103 | (21) | 103 | (21) | |||
| 860 | 131 | 860 | 131 | ||||
| Earnings (Loss) Before Income Tax | 184 | 974 | |||||
| Income Tax Expense (Recovery) | 38 | 231 | |||||
| Net Earnings (Loss) | 146 | 743 |
(1)Revised presentation as of January 1, 2024. See Note 3.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 9 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
ii) Results for the Twelve Months Ended December 31
| Upstream | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the twelve months ended | Oil Sands | Conventional | Offshore | Total | ||||||||||||
| December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||
| Gross Sales | ||||||||||||||||
| External Sales | 21,857 | 20,608 | 1,211 | 1,488 | 1,572 | 1,617 | 24,640 | 23,713 | ||||||||
| Intersegment Sales | 6,590 | 5,584 | 1,848 | 1,785 | — | — | 8,438 | 7,369 | ||||||||
| 28,447 | 26,192 | 3,059 | 3,273 | 1,572 | 1,617 | 33,078 | 31,082 | |||||||||
| Royalties | (3,274) | (3,059) | (76) | (112) | (99) | (99) | (3,449) | (3,270) | ||||||||
| Revenues | 25,173 | 23,133 | 2,983 | 3,161 | 1,473 | 1,518 | 29,629 | 27,812 | ||||||||
| Expenses | ||||||||||||||||
| Purchased Product | 1,851 | 1,457 | 1,823 | 1,695 | — | — | 3,674 | 3,152 | ||||||||
| Transportation and Blending | 11,000 | 10,774 | 320 | 298 | 11 | 16 | 11,331 | 11,088 | ||||||||
| Operating | 2,511 | 2,716 | 555 | 590 | 423 | 384 | 3,489 | 3,690 | ||||||||
| Realized (Gain) Loss on Risk<br> Management | 20 | 17 | (6) | (5) | — | — | 14 | 12 | ||||||||
| Operating Margin | 9,791 | 8,169 | 291 | 583 | 1,039 | 1,118 | 11,121 | 9,870 | ||||||||
| Unrealized (Gain) Loss on Risk<br><br>Management | (16) | 15 | 4 | (19) | — | — | (12) | (4) | ||||||||
| Depreciation, Depletion and<br> Amortization | 3,117 | 2,993 | 442 | 386 | 563 | 487 | 4,122 | 3,866 | ||||||||
| Exploration Expense | 2 | 19 | 1 | 6 | 66 | 17 | 69 | 42 | ||||||||
| (Income) Loss From Equity-<br> Accounted Affiliates | (14) | 6 | 2 | — | (53) | (57) | (65) | (51) | ||||||||
| Segment Income (Loss) | 6,702 | 5,136 | (158) | 210 | 463 | 671 | 7,007 | 6,017 | Downstream | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Canadian Refining | U.S. Refining | Total | ||||||||||||||
| For the twelve months ended December 31, | 2024 | 2023 | 2024 (1) | 2023 | 2024 (1) | 2023 | ||||||||||
| Gross Sales | ||||||||||||||||
| External Sales | 4,787 | 5,385 | 28,299 | 26,376 | 33,086 | 31,761 | ||||||||||
| Intersegment Sales | 523 | 848 | 9 | 17 | 532 | 865 | ||||||||||
| 5,310 | 6,233 | 28,308 | 26,393 | 33,618 | 32,626 | |||||||||||
| Royalties | — | — | — | — | — | — | ||||||||||
| Revenues | 5,310 | 6,233 | 28,308 | 26,393 | 33,618 | 32,626 | ||||||||||
| Expenses | ||||||||||||||||
| Purchased Product | 4,483 | 4,919 | 25,769 | 23,354 | 30,252 | 28,273 | ||||||||||
| Transportation and Blending | — | — | — | — | — | — | ||||||||||
| Operating | 907 | 639 | 2,763 | 2,562 | 3,670 | 3,201 | ||||||||||
| Realized (Gain) Loss on Risk Management | — | — | 8 | — | 8 | — | ||||||||||
| Operating Margin | (80) | 675 | (232) | 477 | (312) | 1,152 | ||||||||||
| Unrealized (Gain) Loss on Risk Management | — | — | 8 | (17) | 8 | (17) | ||||||||||
| Depreciation, Depletion and Amortization | 185 | 185 | 462 | 486 | 647 | 671 | ||||||||||
| Exploration Expense | — | — | — | — | — | — | ||||||||||
| (Income) Loss From Equity-Accounted Affiliates | — | — | — | — | — | — | ||||||||||
| Segment Income (Loss) | (265) | 490 | (702) | 8 | (967) | 498 |
(1)For the twelve months ended December 31, 2024, amounts reflect certain revisions. See Note 25.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 10 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| Corporate and Eliminations | Consolidated | |||
|---|---|---|---|---|
| For the twelve months ended December 31, | 2024 | 2023 | 2024 (1) | 2023 |
| Gross Sales | ||||
| External Sales | — | — | 57,726 | 55,474 |
| Intersegment Sales | (8,970) | (8,234) | — | — |
| (8,970) | (8,234) | 57,726 | 55,474 | |
| Royalties | — | — | (3,449) | (3,270) |
| Revenues | (8,970) | (8,234) | 54,277 | 52,204 |
| Expenses | ||||
| Purchased Product | (7,823) | (6,710) | 26,103 | 24,715 |
| Transportation and Blending | (793) | (947) | 10,538 | 10,141 |
| Purchased Product, Transportation and Blending (2) | (8,616) | (7,657) | 36,641 | 34,856 |
| Operating | (318) | (539) | 6,841 | 6,352 |
| Realized (Gain) Loss on Risk Management | 24 | (3) | 46 | 9 |
| Unrealized (Gain) Loss on Risk Management | 16 | 73 | 12 | 52 |
| Depreciation, Depletion and Amortization | 102 | 107 | 4,871 | 4,644 |
| Exploration Expense | — | — | 69 | 42 |
| (Income) Loss From Equity-Accounted Affiliates | (1) | — | (66) | (51) |
| Segment Income (Loss) | (177) | (215) | 5,863 | 6,300 |
| General and Administrative | 794 | 688 | 794 | 688 |
| Finance Costs, Net (2) | 514 | 538 | 514 | 538 |
| Integration, Transaction and Other Costs | 166 | 85 | 166 | 85 |
| Foreign Exchange (Gain) Loss, Net | 462 | (67) | 462 | (67) |
| (Gain) Loss on Divestiture of Assets (2) | (119) | 20 | (119) | 20 |
| Re-measurement of Contingent Payments | 30 | 59 | 30 | 59 |
| Other (Income) Loss, Net | (55) | (63) | (55) | (63) |
| 1,792 | 1,260 | 1,792 | 1,260 | |
| Earnings (Loss) Before Income Tax | 4,071 | 5,040 | ||
| Income Tax Expense (Recovery) | 929 | 931 | ||
| Net Earnings (Loss) | 3,142 | 4,109 |
(1)For the twelve months ended December 31, 2024, amounts reflect certain revisions. See Note 25.
(2)Revised presentation as of January 1, 2024. See Note 3.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 11 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
B) External Sales by Product
| Upstream | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended | Oil Sands | Conventional | Offshore | Total | ||||||||||||
| December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||
| Crude Oil | 5,220 | 4,812 | 50 | 53 | 58 | 170 | 5,328 | 5,035 | ||||||||
| Natural Gas and Other | 69 | 71 | 195 | 211 | 239 | 249 | 503 | 531 | ||||||||
| NGLs (1) | 43 | 71 | 100 | 64 | 76 | 95 | 219 | 230 | ||||||||
| External Sales | 5,332 | 4,954 | 345 | 328 | 373 | 514 | 6,050 | 5,796 | Downstream | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Canadian Refining | U.S. Refining | Total | ||||||||||||||
| For the three months ended December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||
| Gasoline | 66 | 112 | 3,179 | 3,039 | 3,245 | 3,151 | ||||||||||
| Distillates (2) | 341 | 466 | 2,483 | 2,443 | 2,824 | 2,909 | ||||||||||
| Synthetic Crude Oil | 491 | 505 | — | — | 491 | 505 | ||||||||||
| Asphalt | 115 | 134 | 276 | 254 | 391 | 388 | ||||||||||
| Other Products and Services | 92 | 171 | 634 | 1,116 | 726 | 1,287 | ||||||||||
| External Sales | 1,105 | 1,388 | 6,572 | 6,852 | 7,677 | 8,240 | ||||||||||
| Upstream | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||
| For the twelve months ended | Oil Sands | Conventional | Offshore | Total | ||||||||||||
| December 31, | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||
| Crude Oil | 21,183 | 20,022 | 207 | 238 | 321 | 401 | 21,711 | 20,661 | ||||||||
| Natural Gas and Other | 332 | 271 | 648 | 988 | 925 | 901 | 1,905 | 2,160 | ||||||||
| NGLs (1) | 342 | 315 | 356 | 262 | 326 | 315 | 1,024 | 892 | ||||||||
| External Sales | 21,857 | 20,608 | 1,211 | 1,488 | 1,572 | 1,617 | 24,640 | 23,713 | Downstream | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||||
| Canadian Refining | U.S. Refining | Total | ||||||||||||||
| For the twelve months ended December 31, | 2024 | 2023 | 2024 (3) | 2023 | 2024 (3) | 2023 | ||||||||||
| Gasoline | 429 | 522 | 13,792 | 12,375 | 14,221 | 12,897 | ||||||||||
| Distillates (2) | 1,484 | 1,752 | 10,632 | 9,612 | 12,116 | 11,364 | ||||||||||
| Synthetic Crude Oil | 1,814 | 1,899 | — | — | 1,814 | 1,899 | ||||||||||
| Asphalt | 548 | 537 | 1,029 | 864 | 1,577 | 1,401 | ||||||||||
| Other Products and Services | 512 | 675 | 2,846 | 3,525 | 3,358 | 4,200 | ||||||||||
| External Sales | 4,787 | 5,385 | 28,299 | 26,376 | 33,086 | 31,761 |
(1)Third-party condensate sales are included within NGLs.
(2)Includes diesel and jet fuel.
(3)For the twelve months ended December 31, 2024, amounts reflect certain revisions. See Note 25.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 12 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
C) Geographical Information
| Revenues (1) | ||||
|---|---|---|---|---|
| Three Months Ended | Twelve Months Ended | |||
| For the periods ended December 31, | 2024 | 2023 | 2024 (2) | 2023 |
| Canada | 6,556 | 6,300 | 26,791 | 25,128 |
| United States | 5,967 | 6,518 | 26,333 | 25,943 |
| China | 290 | 316 | 1,153 | 1,133 |
| Consolidated | 12,813 | 13,134 | 54,277 | 52,204 |
(1)Revenues by country are classified based on where the operations are located.
(2)For the twelve months ended December 31, 2024, amounts reflect certain revisions. See Note 25.
| Non-Current Assets (1) | ||
|---|---|---|
| December 31, | December 31, | |
| As at | 2024 | 2023 |
| Canada | 37,006 | 35,876 |
| United States | 5,902 | 5,230 |
| China | 1,249 | 1,608 |
| Indonesia | 295 | 344 |
| Consolidated | 44,452 | 43,058 |
(1)Includes exploration and evaluation (“E&E”) assets, property, plant and equipment (“PP&E”), right-of-use (“ROU”) assets, income tax receivable, investments in equity-accounted affiliates, precious metals, intangible assets and goodwill.
D) Assets by Segment
| E&E Assets | PP&E | ROU Assets | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, | December 31, | December 31, | December 31, | December 31, | December 31, | |||||||
| As at | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||
| Oil Sands | 461 | 729 | 24,646 | 24,443 | 1,018 | 849 | ||||||
| Conventional | 15 | — | 2,230 | 2,209 | 57 | 1 | ||||||
| Offshore | 8 | 9 | 3,365 | 2,798 | 95 | 102 | ||||||
| Canadian Refining | — | — | 2,511 | 2,469 | 39 | 28 | ||||||
| U.S. Refining | — | — | 5,538 | 5,014 | 342 | 268 | ||||||
| Corporate and Eliminations | — | — | 278 | 317 | 399 | 432 | ||||||
| Consolidated | 484 | 738 | 38,568 | 37,250 | 1,950 | 1,680 | Goodwill | Total Assets | ||||
| --- | --- | --- | --- | --- | ||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||
| As at | 2024 | 2023 | 2024 | 2023 | ||||||||
| Oil Sands | 2,923 | 2,923 | 31,668 | 31,673 | ||||||||
| Conventional | — | — | 2,610 | 2,429 | ||||||||
| Offshore | — | — | 4,089 | 3,511 | ||||||||
| Canadian Refining | — | — | 2,901 | 2,960 | ||||||||
| U.S. Refining | — | — | 9,517 | 8,660 | ||||||||
| Corporate and Eliminations | — | — | 5,754 | 4,682 | ||||||||
| Consolidated | 2,923 | 2,923 | 56,539 | 53,915 | ||||||||
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 13 | |||||||||||
| --- | --- |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
E) Capital Expenditures (1)
| Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|
| For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 |
| Capital Investment | ||||
| Oil Sands | 773 | 618 | 2,714 | 2,382 |
| Conventional | 121 | 129 | 421 | 452 |
| Offshore | ||||
| Atlantic | 312 | 161 | 1,077 | 635 |
| Asia Pacific | 24 | 3 | 68 | 7 |
| Total Upstream | 1,230 | 911 | 4,280 | 3,476 |
| Canadian Refining | 63 | 46 | 208 | 145 |
| U.S. Refining | 168 | 167 | 488 | 602 |
| Total Downstream | 231 | 213 | 696 | 747 |
| Corporate and Eliminations | 17 | 46 | 39 | 75 |
| 1,478 | 1,170 | 5,015 | 4,298 | |
| Acquisitions | ||||
| Oil Sands | 2 | 2 | 9 | 37 |
| Conventional | 1 | — | 13 | 5 |
| U.S. Refining (2) | — | — | — | 385 |
| 3 | 2 | 22 | 427 | |
| Total Capital Expenditures | 1,481 | 1,172 | 5,037 | 4,725 |
(1)Includes expenditures on PP&E, E&E assets and capitalized interest.
(2)In 2023, Cenovus was deemed to have disposed of its pre-existing interest in BP-Husky Refining LLC (“Toledo”) and reacquired it at fair value as required by International Financial Reporting Standard 3, “Business Combinations” (“IFRS 3”). The acquisition capital above does not include the fair value of the pre‑existing interest in Toledo of $368 million.
| 2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE |
|---|
In these interim Consolidated Financial Statements, unless otherwise indicated, all dollars are expressed in Canadian dollars. All references to C$ or $ are to Canadian dollars and references to US$ are to U.S. dollars.
These interim Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) (the “IFRS Accounting Standards”) applicable to the preparation of interim financial statements, including International Accounting Standard 34, “Interim Financial Reporting”. These interim Consolidated Financial Statements were prepared following the same accounting policies and methods of computation as the annual Consolidated Financial Statements for the year ended December 31, 2023.
Certain information and disclosures normally included in the notes to the annual Consolidated Financial Statements were condensed. Accordingly, these interim Consolidated Financial Statements should be read in conjunction with the annual Consolidated Financial Statements for the year ended December 31, 2023, which were prepared in accordance with IFRS Accounting Standards.
These interim Consolidated Financial Statements were approved by the Board of Directors effective February 19, 2025.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 14 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 3. UPDATE TO ACCOUNTING POLICIES |
|---|
A) Adjustments to the Consolidated Statements of Comprehensive Income (Loss)
As of January 1, 2024, the Company updated its accounting policies to aggregate certain items presented in the Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statements of Cash Flows to more appropriately reflect the integrated operations of the business. There were no re-measurements of balances. Certain historical disaggregated balances continue to be presented in Note 1.
The following presentation changes were made with comparative periods being re-presented:
•Gross sales and royalties were aggregated and presented as ‘Revenues’.
•Purchased product and transportation and blending were aggregated and presented as ‘Purchased Product, Transportation and Blending’.
•Depreciation, depletion and amortization, and exploration expense were aggregated and presented as ‘Depreciation, Depletion, Amortization and Exploration Expense’.
•Finance costs and interest income were aggregated and presented as ‘Finance Costs, Net’.
•Revaluation (gain) loss and (gain) loss on divestiture of assets were aggregated and presented as ‘(Gain) Loss on Divestiture of Assets’.
B) Recent Accounting Pronouncements
New Accounting Standards and Interpretations not yet Adopted
Presentation and Disclosure in Financial Statements
On April 9, 2024, the IASB issued IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”), which will replace International Accounting Standard 1, “Presentation of Financial Statements”. IFRS 18 will establish a revised structure for the Consolidated Statements of Comprehensive Income (Loss) and improve comparability across entities and reporting periods.
IFRS 18 is effective for annual periods beginning on or after January 1, 2027. The standard is to be applied retrospectively, with certain transition provisions. The Company is currently evaluating the impact of adopting IFRS 18 on the Consolidated Financial Statements.
Financial Instruments
On May 30, 2024, the IASB issued amendments to IFRS 9, “Financial Instruments”, and IFRS 7, “Financial Instruments: Disclosures”. The amendments include clarifications on the derecognition of financial liabilities and the classification of certain financial assets. In addition, new disclosure requirements for equity instruments designated as FVOCI were added. The amendments are effective for annual periods beginning on or after January 1, 2026, and will be applied retrospectively. The Company is currently evaluating the impact of the amendments on the Consolidated Financial Statements.
| 4. FINANCE COSTS, NET | | --- || | Three Months Ended | | Twelve Months Ended | | | --- | --- | --- | --- | --- | | For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 | | Interest Expense – Short-Term Borrowings and Long-Term Debt | 78 | 77 | 307 | 362 | | Net Premium (Discount) on Redemption of Long-Term Debt (1) | — | — | — | (84) | | Interest Expense – Lease Liabilities (Note 12) | 43 | 40 | 162 | 161 | | Unwinding of Discount on Decommissioning Liabilities (Note 15) | 56 | 55 | 225 | 220 | | Other | 5 | 14 | 35 | 32 | | Capitalized Interest | (15) | (8) | (45) | (20) | | Finance Costs | 167 | 178 | 684 | 671 | | Interest Income | (47) | (33) | (170) | (133) | | | 120 | 145 | 514 | 538 |
(1)Includes the premium or discount on redemption, net of transaction costs and the amortization of associated fair value adjustments.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 15 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 5. FOREIGN EXCHANGE (GAIN) LOSS, NET | | --- || | Three Months Ended | | Twelve Months Ended | | | --- | --- | --- | --- | --- | | For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 | | Unrealized Foreign Exchange (Gain) Loss on Translation of: | | | | | | U.S. Dollar Debt | 338 | (112) | 442 | (231) | | Other | 111 | 1 | 108 | 21 | | Unrealized Foreign Exchange (Gain) Loss | 449 | (111) | 550 | (210) | | Realized Foreign Exchange (Gain) Loss | (68) | 37 | (88) | 143 | | | 381 | (74) | 462 | (67) | | 6. DIVESTITURES | | --- |
The Company closed a transaction with Athabasca Oil Corporation (“Athabasca”) to create the jointly-controlled Duvernay Energy Corporation (“Duvernay”). Cenovus contributed non-monetary assets with a fair value of $94 million and cash of $18 million, before closing adjustments, in exchange for a 30 percent equity interest in Duvernay. The Company recognized an investment of $84 million in Duvernay and a before-tax gain on divestiture of assets of $65 million (after-tax gain – $50 million), reflecting the difference between the carrying value and fair value of contributed assets to the extent of Athabasca’s share.
The Company also closed the sale of non-core assets in its Conventional segment for net proceeds of $39 million and recorded a before-tax gain of $51 million (after-tax gain – $39 million).
| 7. IMPAIRMENT CHARGES AND REVERSALS |
|---|
A) Upstream Cash-Generating Units
i) 2024 Impairment Charges
The Company tested cash-generating units (“CGUs”) with associated goodwill for impairment as at December 31, 2024, and there were no impairments. No impairment indicators were identified for the remaining CGUs.
Key Assumptions
The recoverable amounts (Level 3) of Cenovus’s Oil Sands CGUs with associated goodwill were estimated using fair value less costs of disposal (“FVLCOD”). Key assumptions used to estimate the present value of future net cash flows from reserves include expected future production volumes, quantity of reserves, forward commodity prices and future development and operating expenses, all consistent with Cenovus’s independent qualified reserve evaluators (“IQREs”), as well as discount rates. Fair values for producing properties were calculated based on discounted after-tax cash flows of proved and probable reserves using forward prices and cost estimates as at December 31, 2024. All reserves were evaluated as at December 31, 2024, by the Company’s IQREs.
Crude Oil, NGLs and Natural Gas Prices
The forward commodity prices as at December 31, 2024, used to determine future cash flows from crude oil, NGLs and natural gas reserves were:
| 2025 | 2026 | 2027 | 2028 | 2029 | Average Annual Increase Thereafter<br><br>(percent) | |
|---|---|---|---|---|---|---|
| West Texas Intermediate (“WTI”) (US$/bbl) (1) | 71.58 | 74.48 | 75.81 | 77.66 | 79.22 | 2.00 |
| Western Canadian Select at Hardisty (2) (C$/bbl) | 82.69 | 84.27 | 83.81 | 85.70 | 87.45 | 2.00 |
| Condensate at Edmonton (C$/bbl) | 100.14 | 100.72 | 100.24 | 102.73 | 104.79 | 2.00 |
| Alberta Energy Company Natural Gas (C$/Mcf) (3) | 2.36 | 3.33 | 3.48 | 3.69 | 3.76 | 2.00 |
(1)Barrel ("bbl").
(2)Western Canadian Select at Hardisty (“WCS”).
(3)One thousand cubic feet (“Mcf”).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 16 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
Discount Rates
Discounted future cash flows were determined by applying a discount rate of 14 percent.
Sensitivities
A one percent increase in the discount rate or a five percent decrease in forward commodity price estimates would not impact the results of the impairment tests performed.
ii) 2023 Impairment Charges
The Company tested the CGUs with associated goodwill for impairment as at December 31, 2023, and there were no impairments. No impairment indicators were identified for the remaining CGUs.
B) Downstream Cash-Generating Units
i) 2024 Impairment Charges and Reversals
As at December 31, 2024, lower forward Chicago 3-2-1 crack spreads, net of renewable identification numbers (“RINs”), that would result in lower margins for refined products was identified as an indicator of impairment for the Lima, Toledo and Wood River CGUs. As a result, these CGUs were tested for impairment.
The recoverable amounts of the Lima, Toledo and Wood River CGUs were in excess of their respective carrying amounts and no impairment was recorded. There were no indicators of impairment for the remaining downstream CGUs and no indicators of impairment reversal for the Superior and Borger CGUs.
Key Assumptions
The recoverable amount (Level 3) of each of the CGUs were determined using FVLCOD. FVLCOD was calculated based on discounted after-tax cash flows using forward prices and cost estimates. Key assumptions in the determination of future cash flows included refined product production, forward crude oil prices, forward crack spreads, net of RINs, future capital expenditures, future operating costs and discount rates. Forward prices are based on third-party consultant forecasts.
Crude Oil and Select Refining Benchmark Prices
As at December 31, 2024, the forward prices used to determine future cash flows were:
| (US$/bbl) | 2025 | 2026 | 2027 | 2028 | 2029 |
|---|---|---|---|---|---|
| WTI | 77.68 | 77.07 | 78.74 | 81.51 | 83.14 |
| Differential WTI – WCS | (14.17) | (15.34) | (15.71) | (16.62) | (17.11) |
| Chicago 3-2-1 Crack Spread | 20.01 | 21.97 | 22.60 | 23.87 | 24.66 |
| Renewable Identification Numbers | 6.79 | 7.31 | 8.05 | 8.69 | 9.03 |
Subsequent estimated cash flows were determined using a pricing growth rate between one percent and six percent up to the year 2034.
Discount Rates
Discounted future cash flows were determined by applying a discount rate between 15 percent and 16 percent based on the individual characteristics of the CGU and on the economic and operating factors.
Sensitivities
The sensitivity analysis below shows the impact that a change in the discount rate or forward prices would have on the impairment amount as at December 31, 2024, for the U.S. Refining CGUs:
| Increase (Decrease) to Impairment Amount | ||
|---|---|---|
| One Percent Increase in<br><br>the Discount Rate | Five Percent Decrease in the Forward Prices | |
| Lima and Wood River CGUs | 214 | 619 |
For the Toledo CGU, a one percent increase in the discount rate or a five percent decrease in forward prices would not impact the results of the impairment test performed.
ii) 2023 Impairment Charges and Reversals
As at December 31, 2023, there were no indicators of impairment or impairment reversals for the Company's downstream CGUs.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 17 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 8. INCOME TAXES | | --- || | Three Months Ended | | Twelve Months Ended | | | --- | --- | --- | --- | --- | | For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 | | Current Tax | | | | | | Canada | 311 | 100 | 1,141 | 1,041 | | United States | 7 | (113) | 9 | (109) | | Asia Pacific | 57 | 72 | 214 | 224 | | Other International | 13 | 6 | 39 | 25 | | Total Current Tax Expense (Recovery) | 388 | 65 | 1,403 | 1,181 | | Deferred Tax Expense (Recovery) | (350) | 166 | (474) | (250) | | | 38 | 231 | 929 | 931 | | 9. PER SHARE AMOUNTS | | --- |
A) Net Earnings (Loss) Per Common Share – Basic and Diluted
| Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|
| For periods ended December 31, | 2024 | 2023 | 2024 | 2023 |
| Net Earnings (Loss) | 146 | 743 | 3,142 | 4,109 |
| Effect of Cumulative Dividends on Preferred Shares | (9) | (9) | (36) | (36) |
| Net Earnings (Loss) – Basic | 137 | 734 | 3,106 | 4,073 |
| Effect of Stock-Based Compensation | (7) | (118) | 3 | (12) |
| Net Earnings (Loss) – Diluted | 130 | 616 | 3,109 | 4,061 |
| Basic – Weighted Average Number of Shares (thousands) | 1,825,847 | 1,879,270 | 1,850,193 | 1,895,487 |
| Dilutive Effect of Warrants | 2,704 | 5,837 | 4,483 | 22,223 |
| Dilutive Effect of Stock-Based Compensation | 10,410 | 21,593 | 8,540 | 22,135 |
| Diluted – Weighted Average Number of Shares (thousands) | 1,838,961 | 1,906,700 | 1,863,216 | 1,939,845 |
| Net Earnings (Loss) Per Common Share – Basic ($) | 0.08 | 0.39 | 1.68 | 2.15 |
| Net Earnings (Loss) Per Common Share – Diluted (1) ($) | 0.07 | 0.32 | 1.67 | 2.09 |
(1)For the three months ended December 31, 2024, net earnings of $nil (2023 – $nil) and 3.5 million common shares (2023 – 1.4 million), related to the assumed exercise of stock-based compensation, were excluded from the calculation of dilutive net earnings (loss) per share as the effect was anti-dilutive. For the twelve months ended December 31, 2024, net earnings of $16 million (2023 – $nil) and 9.8 million common shares (2023 – 1.6 million), related to the assumed exercise of stock-based compensation were excluded from the calculation of dilutive net earnings (loss) per share as the effect was anti-dilutive.
B) Common Share Dividends
| 2024 | 2023 | |||
|---|---|---|---|---|
| For the twelve months ended December 31, | Per Share | Amount | Per Share | Amount |
| Base Dividends | 0.680 | 1,255 | 0.525 | 990 |
| Variable Dividends | 0.135 | 251 | — | — |
| Total Common Share Dividends Declared and Paid | 0.815 | 1,506 | 0.525 | 990 |
The declaration of common share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.
On February 19, 2025, the Company’s Board of Directors declared a first quarter base dividend of $0.180 per common share, payable on March 31, 2025, to common shareholders of record as at March 14, 2025.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 18 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
C) Preferred Share Dividends
| For the twelve months ended December 31, | 2024 | 2023 |
|---|---|---|
| Series 1 First Preferred Shares | 7 | 7 |
| Series 2 First Preferred Shares | 2 | 2 |
| Series 3 First Preferred Shares | 12 | 12 |
| Series 5 First Preferred Shares | 9 | 9 |
| Series 7 First Preferred Shares | 6 | 6 |
| Total Preferred Share Dividends Declared | 36 | 36 |
The declaration of preferred share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.
For the twelve months ended December 31, 2024, the Company paid preferred share dividends of $45 million (2023 – $36 million).
On February 19, 2025, the Company’s Board of Directors declared first quarter dividends of $6 million payable on March 31, 2025, to preferred shareholders of record as at March 14, 2025.
| 10. EXPLORATION AND EVALUATION ASSETS, NET | | --- || | Total | | --- | --- | | As at December 31, 2023 | 738 | | Acquisition | 7 | | Additions | 65 | | Transfer to PP&E (Note 11) | (285) | | Write-downs | (37) | | Change in Decommissioning Liabilities | (5) | | Exchange Rate Movements and Other | 1 | | As at December 31, 2024 | 484 | | Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 19 | | --- | --- |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 11. PROPERTY, PLANT AND EQUIPMENT, NET | | --- || | Crude Oil and Natural Gas Properties | Processing, Transportation and Storage Assets | Refining Assets | Other Assets (1) | Total | | --- | --- | --- | --- | --- | --- | | COST | | | | | | | As at December 31, 2023 | 47,425 | 272 | 12,770 | 1,908 | 62,375 | | Acquisitions | 15 | — | — | — | 15 | | Additions | 4,215 | 3 | 661 | 71 | 4,950 | | Transfer from E&E (Note 10) | 285 | — | — | — | 285 | | Change in Decommissioning Liabilities | 312 | 2 | 4 | (5) | 313 | | Divestitures (Note 6) | (270) | — | — | (1) | (271) | | Exchange Rate Movements and Other | 108 | 3 | 890 | 2 | 1,003 | | As at December 31, 2024 | 52,090 | 280 | 14,325 | 1,975 | 68,670 | | ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION | | | | | | | As at December 31, 2023 | 17,975 | 129 | 5,667 | 1,354 | 25,125 | | Depreciation, Depletion and Amortization | 3,949 | 11 | 539 | 81 | 4,580 | | Divestitures (Note 6) | (208) | — | — | — | (208) | | Exchange Rate Movements and Other | 133 | 1 | 469 | 2 | 605 | | As at December 31, 2024 | 21,849 | 141 | 6,675 | 1,437 | 30,102 | | CARRYING VALUE | | | | | | | As at December 31, 2023 | 29,450 | 143 | 7,103 | 554 | 37,250 | | As at December 31, 2024 | 30,241 | 139 | 7,650 | 538 | 38,568 |
(1)Includes assets within the commercial fuels business, office furniture, fixtures, leasehold improvements, information technology and aircraft.
| 12. LEASES |
|---|
A) Right-of-Use Assets, Net
| Real Estate | Transportation and Storage Assets (1) | Refining Assets | Other Assets (2) | Total | |
|---|---|---|---|---|---|
| COST | |||||
| As at December 31, 2023 | 588 | 1,964 | 161 | 70 | 2,783 |
| Additions | 2 | 317 | — | 51 | 370 |
| Exchange Rate Movements and Other | 2 | 111 | 17 | 4 | 134 |
| As at December 31, 2024 | 592 | 2,392 | 178 | 125 | 3,287 |
| ACCUMULATED DEPRECIATION | |||||
| As at December 31, 2023 | 156 | 863 | 65 | 19 | 1,103 |
| Depreciation | 35 | 198 | 21 | 37 | 291 |
| Exchange Rate Movements and Other | 2 | (62) | 8 | (5) | (57) |
| As at December 31, 2024 | 193 | 999 | 94 | 51 | 1,337 |
| CARRYING VALUE | |||||
| As at December 31, 2023 | 432 | 1,101 | 96 | 51 | 1,680 |
| As at December 31, 2024 | 399 | 1,393 | 84 | 74 | 1,950 |
(1)Includes a pipeline, storage tanks, railcars, vessels, barges, a natural gas processing plant and caverns.
(2)Includes assets in the commercial fuels business, fleet vehicles, camps and other equipment.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 20 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
B) Lease Liabilities
| Total | |
|---|---|
| As at December 31, 2023 | 2,658 |
| Additions | 363 |
| Interest Expense (Note 4) | 162 |
| Lease Payments | (461) |
| Exchange Rate Movements and Other | 205 |
| As at December 31, 2024 | 2,927 |
| Less: Current Portion | 359 |
| Long-Term Portion | 2,568 |
| 13. DEBT AND CAPITAL STRUCTURE | |
| --- |
A) Short-Term Borrowings
| December 31, | December 31, | ||
|---|---|---|---|
| As at | Notes | 2024 | 2023 |
| Uncommitted Demand Facilities | i | — | — |
| WRB Uncommitted Demand Facilities | ii | 173 | 179 |
| Total Debt Principal | 173 | 179 |
i) Uncommitted Demand Facilities
As at December 31, 2024, the Company had uncommitted demand facilities of $1.7 billion (December 31, 2023 – $1.7 billion) in place, of which $1.4 billion may be drawn for general purposes, or the full amount may be available to issue letters of credit. As at December 31, 2024, there were outstanding letters of credit aggregating to $355 million (December 31, 2023 – $364 million) and no direct borrowings (December 31, 2023 – $nil).
ii) WRB Uncommitted Demand Facilities
WRB has uncommitted demand facilities of US$450 million (December 31, 2023 – US$450 million) that may be used to cover short-term working capital requirements, of which Cenovus’s proportionate share is 50 percent. As at December 31, 2024, US$240 million was drawn on these facilities, of which Cenovus’s proportionate share was US$120 million (C$173 million). As at December 31, 2023, Cenovus's proportionate share of drawings was US$135 million (C$179 million).
B) Long-Term Debt
| December 31, | December 31, | |
|---|---|---|
| As at | 2024 | 2023 |
| Committed Credit Facility | — | — |
| U.S. Dollar Denominated Unsecured Notes (1) | 5,470 | 5,028 |
| Canadian Dollar Unsecured Notes | 2,000 | 2,000 |
| Total Debt Principal | 7,470 | 7,028 |
| Debt Premiums (Discounts), Net, and Transaction Costs | 64 | 80 |
| Long-Term Debt | 7,534 | 7,108 |
| Less: Current Portion | 192 | — |
| Long-Term Portion | 7,342 | 7,108 |
(1)Total U.S. dollar denominated unsecured notes as at December 31, 2024, was US$3.8 billion (December 31, 2023 — US$3.8 billion).
On June 26, 2024, Cenovus renewed its existing committed credit facility to extend the maturity dates by more than one year. The committed credit facility consists of a $2.2 billion tranche maturing on June 26, 2027, and a $3.3 billion tranche maturing on June 26, 2028. As at December 31, 2024, no amount was drawn on the credit facility (December 31, 2023 – $nil).
The committed credit facility may include Canadian overnight repo rate average loans, secured overnight financing rate loans, prime rate loans and U.S. base rate loans.
As at December 31, 2024, the Company was in compliance with all of the terms of its debt agreements. Under the terms of Cenovus’s committed credit facility, the Company is required to maintain a total debt to capitalization ratio, as defined in the agreement, not to exceed 65 percent. The Company is below this limit.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 21 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
C) Capital Structure
Cenovus’s capital structure consists of shareholders’ equity and Net Debt. Net Debt includes the Company’s short-term borrowings, and the current and long-term portions of long-term debt, net of cash and cash equivalents, and short-term investments. Net Debt is used in managing the Company’s capital structure. The Company’s objectives when managing its capital structure are to maintain financial flexibility, preserve access to capital markets, ensure its ability to finance internally generated growth and to fund potential acquisitions, while maintaining the ability to meet the Company’s financial obligations as they come due. To ensure financial resilience, Cenovus may, among other actions, adjust capital and operating spending, steward working capital, draw down on its credit facilities or repay existing debt, adjust dividends paid to shareholders, purchase the Company’s common shares or preferred shares for cancellation, issue new debt, or issue new shares.
Cenovus monitors its capital structure and financing requirements using, among other things, Total Debt, Net Debt to adjusted earnings before interest, taxes and depreciation, depletion and amortization (“Adjusted EBITDA”), Net Debt to Adjusted Funds Flow and Net Debt to Capitalization. These measures are used to steward Cenovus’s overall debt position as measures of Cenovus’s overall financial strength.
Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times and Net Debt at or below $4.0 billion over the long-term at a West Texas Intermediate (“WTI”) price of US$45.00 per barrel. These measures may fluctuate periodically outside this range due to factors such as persistently high or low commodity prices or the strengthening or weakening of the Canadian dollar relative to the U.S. dollar.
Net Debt to Adjusted EBITDA
| December 31, | December 31, | |
|---|---|---|
| As at | 2024 | 2023 |
| Short-Term Borrowings | 173 | 179 |
| Current Portion of Long-Term Debt | 192 | — |
| Long-Term Portion of Long-Term Debt | 7,342 | 7,108 |
| Total Debt | 7,707 | 7,287 |
| Less: Cash and Cash Equivalents | (3,093) | (2,227) |
| Net Debt | 4,614 | 5,060 |
| Net Earnings (Loss) | 3,142 | 4,109 |
| Add (Deduct): | ||
| Finance Costs, Net (1) | 514 | 538 |
| Income Tax Expense (Recovery) | 929 | 931 |
| Depreciation, Depletion and Amortization | 4,871 | 4,644 |
| Exploration and Evaluation Asset Write-downs | 37 | 29 |
| (Income) Loss From Equity-Accounted Affiliates | (66) | (51) |
| Unrealized (Gain) Loss on Risk Management | 12 | 52 |
| Foreign Exchange (Gain) Loss, Net | 462 | (67) |
| (Gain) Loss on Divestiture of Assets (1) | (119) | 20 |
| Re-measurement of Contingent Payments | 30 | 59 |
| Other (Income) Loss, Net | (55) | (63) |
| Adjusted EBITDA (2) | 9,757 | 10,201 |
| Net Debt to Adjusted EBITDA (times) | 0.5 | 0.5 |
(1)Revised presentation as of January 1, 2024. See Note 3.
(2)Calculated on a trailing twelve-month basis.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 22 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
Net Debt to Adjusted Funds Flow
| December 31, | December 31, | |
|---|---|---|
| As at | 2024 | 2023 |
| Net Debt | 4,614 | 5,060 |
| Cash From (Used in) Operating Activities | 9,235 | 7,388 |
| (Add) Deduct: | ||
| Settlement of Decommissioning Liabilities | (234) | (222) |
| Net Change in Non-Cash Working Capital | 1,305 | (1,193) |
| Adjusted Funds Flow (1) | 8,164 | 8,803 |
| Net Debt to Adjusted Funds Flow (times) | 0.6 | 0.6 |
(1)Calculated on a trailing twelve-month basis.
Net Debt to Capitalization
| December 31, | December 31, | |
|---|---|---|
| As at | 2024 | 2023 |
| Net Debt | 4,614 | 5,060 |
| Shareholders’ Equity | 29,754 | 28,698 |
| Capitalization | 34,368 | 33,758 |
| Net Debt to Capitalization (percent) | 13 | 15 |
| 14. CONTINGENT PAYMENTS | ||
| --- |
On August 31, 2024, the variable payment obligation associated with the transaction with BP Canada Energy Group ULC to purchase the remaining 50 percent interest in Sunrise Oil Sands Partnership ended. In the twelve months ended December 31, 2024, the Company made payments of $301 million for the quarterly payment periods ending November 30, 2023, February 29, 2024, May 31, 2024, and August 31, 2024.
| 15. DECOMMISSIONING LIABILITIES | | --- || | Total | | --- | --- | | As at December 31, 2023 | 4,155 | | Liabilities Incurred | 24 | | Liabilities Settled | (234) | | Liabilities Disposed | (72) | | Change in Estimated Future Cash Flows | 276 | | Change in Discount Rate | 132 | | Unwinding of Discount on Decommissioning Liabilities (Note 4) | 225 | | Exchange Rate Movements | 28 | | As at December 31, 2024 | 4,534 |
As at December 31, 2024, the undiscounted amount of estimated future cash flows required to settle the obligation was discounted using a credit-adjusted risk-free rate of 5.2 percent (December 31, 2023 – 5.5 percent) and assumes an inflation rate of two percent (December 31, 2023 – two percent).
The Company deposits cash into restricted accounts that will be used to fund decommissioning liabilities in offshore China in accordance with the provisions of the regulations of the People’s Republic of China. As at December 31, 2024, the Company had $241 million in long-term restricted cash (December 31, 2023 – $211 million).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 23 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 16. OTHER LIABILITIES | | --- || | December 31, | December 31, | | --- | --- | --- | | As at | 2024 | 2023 | | Renewable Volume Obligation, Net (1) | 284 | 397 | | Pension and Other Post-Employment Benefit Plan | 269 | 276 | | Employee Long-Term Incentives | 96 | 100 | | Provisions for Onerous and Unfavourable Contracts | 66 | 72 | | Provision for West White Rose Expansion Project | 54 | 156 | | Drilling Provisions | 3 | 25 | | Other | 147 | 157 | | | 919 | 1,183 |
(1)The gross amounts of the renewable volume obligation and RINs asset were $652 million and $368 million, respectively (December 31, 2023 – $785 million and $388 million, respectively).
| 17. SHARE CAPITAL AND WARRANTS |
|---|
A) Authorized
Cenovus is authorized to issue an unlimited number of common shares, and first and second preferred shares not exceeding, in aggregate, 20 percent of the number of issued and outstanding common shares. The first and second preferred shares may be issued in one or more series with rights and conditions to be determined by the Board of Directors prior to issuance and subject to the Company’s articles.
B) Issued and Outstanding – Common Shares
| December 31, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Number of<br><br>Common<br><br>Shares<br><br>(thousands) | Amount | Number of<br><br>Common<br><br>Shares<br><br>(thousands) | Amount | |
| Outstanding, Beginning of Year | 1,871,868 | 16,031 | 1,909,190 | 16,320 |
| Issued Upon Exercise of Warrants | 3,982 | 39 | 2,610 | 26 |
| Issued Under Stock Option Plans | 5,049 | 68 | 3,679 | 58 |
| Purchase of Common Shares Under NCIB | (55,861) | (479) | (43,611) | (373) |
| Outstanding, End of Period | 1,825,038 | 15,659 | 1,871,868 | 16,031 |
As at December 31, 2024, there were 48.8 million (December 31, 2023 – 45.5 million) common shares available for future issuance under the stock option plan.
C) Normal Course Issuer Bid
On November 7, 2024, the Company received approval from the TSX to renew the Company’s NCIB program to purchase up to 127.5 million common shares during the period from November 11, 2024, to November 10, 2025.
For the twelve months ended December 31, 2024, the Company purchased and cancelled 55.9 million common shares through the NCIB. The shares were purchased at a volume weighted average price of $25.38 per common share for a total of $1.4 billion. Paid in surplus was reduced by $966 million, representing the excess of the purchase price of the common shares over their average carrying value of $939 million and taxes paid of $27 million.
From January 1, 2025, to February 14, 2025, the Company purchased an additional 1.5 million common shares for $32 million. As at February 14, 2025, the Company can further purchase up to 124.9 million common shares under the NCIB.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 24 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
D) Treasury Shares
In 2024, Cenovus established an employee benefit plan trust (the “Trust”). The Trust, through an independent trustee, acquires Cenovus’s common shares on the open market, which are held to satisfy the Company’s obligations under certain stock-based compensation plans.
| December 31, 2024 | ||
|---|---|---|
| Number of<br><br>Common<br><br>Shares<br><br>(thousands) | Amount | |
| Outstanding, Beginning of Year | — | — |
| Purchase of Common Shares Under Employee Benefit Plan | 2,000 | 43 |
| Outstanding, End of Period | 2,000 | 43 |
E) Issued and Outstanding – Preferred Shares
| December 31, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Number of Preferred Shares (thousands) | Amount | Number of<br><br>Preferred<br><br>Shares<br><br>(thousands) | Amount | |
| Outstanding, Beginning of Year | 36,000 | 519 | 36,000 | 519 |
| Preferred Shares Redeemed | (10,000) | (163) | — | — |
| Outstanding, End of Period | 26,000 | 356 | 36,000 | 519 |
On December 31, 2024, Cenovus exercised its right to redeem all 10.0 million of the Company’s series 3 preferred shares at a price of $25.00 per share, for a total of $250 million. Paid in surplus was reduced by $87 million, representing the excess of the purchase price of the series 3 preferred shares over their carrying value.
The Company had the following preferred shares outstanding as at December 31, 2024:
| As at December 31, 2024 | Dividend Reset Date | Dividend Rate (percent) | Number of Preferred Shares (thousands) |
|---|---|---|---|
| Series 1 First Preferred Shares | March 31, 2026 | 2.58 | 10,740 |
| Series 2 First Preferred Shares (1) | Quarterly | 5.21 | 1,260 |
| Series 5 First Preferred Shares | March 31, 2025 | 4.59 | 8,000 |
| Series 7 First Preferred Shares | June 30, 2025 | 3.94 | 6,000 |
(1) The floating-rate dividend was 6.77 percent from December 31, 2023, to March 30, 2024, 6.71 percent for the period from March 31, 2024, to June 29, 2024, 6.60 percent from June 30, 2024 to September 29, 2024, and 5.94 percent from September 30, 2024, to December 30, 2024.
F) Issued and Outstanding – Warrants
| December 31, 2024 | December 31, 2023 | |||
|---|---|---|---|---|
| Number of<br><br>Warrants<br><br>(thousands) | Amount | Number of<br><br>Warrants<br><br>(thousands) | Amount | |
| Outstanding, Beginning of Year | 7,625 | 25 | 55,720 | 184 |
| Exercised | (3,982) | (13) | (2,610) | (8) |
| Purchased and Cancelled | — | — | (45,485) | (151) |
| Outstanding, End of Period | 3,643 | 12 | 7,625 | 25 |
The exercise price of the warrants is $6.54 per share. The warrants expire on January 1, 2026.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 25 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 18. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | | --- || | Pension and Other Post-Employment Benefits | Private Equity Investments | Foreign Currency Translation Adjustment | Total | | --- | --- | --- | --- | --- | | As at December 31, 2022 | 99 | 29 | 1,342 | 1,470 | | Other Comprehensive Income (Loss), Before Tax | (58) | 63 | (286) | (281) | | Reclassification on Divestiture | — | — | 12 | 12 | | Income Tax (Expense) Recovery | 14 | (7) | — | 7 | | As at December 31, 2023 | 55 | 85 | 1,068 | 1,208 | | Other Comprehensive Income (Loss), Before Tax | 19 | 81 | 1,020 | 1,120 | | Income Tax (Expense) Recovery | (5) | (10) | — | (15) | | As at December 31, 2024 | 69 | 156 | 2,088 | 2,313 | | 19. STOCK-BASED COMPENSATION PLANS | | --- |
Cenovus has a number of stock-based compensation plans that include net settlement rights (“NSRs”), Cenovus replacement stock options, performance share units (“PSUs”), restricted share units (“RSUs”) and deferred share units.
The following tables summarize information related to the Company’s stock-based compensation plans:
| Units<br><br>Outstanding | Units<br><br>Exercisable | |
|---|---|---|
| As at December 31, 2024 | (thousands) | (thousands) |
| Stock Options With Associated Net Settlement Rights | 8,653 | 4,741 |
| Cenovus Replacement Stock Options | 348 | 348 |
| Performance Share Units | 7,210 | — |
| Restricted Share Units | 8,148 | — |
| Deferred Share Units | 1,761 | 1,761 |
The weighted average exercise price of NSRs and Cenovus replacement stock options outstanding as at December 31, 2024, were $17.83 and $3.54, respectively.
| Units<br><br>Granted | Units<br><br>Vested and<br><br>Exercised/<br><br>Paid Out | |
|---|---|---|
| For the twelve months ended December 31, | (thousands) | (thousands) |
| Stock Options With Associated Net Settlement Rights | 2,427 | 5,251 |
| Cenovus Replacement Stock Options | — | 614 |
| Performance Share Units | 6,368 | 8,903 |
| Restricted Share Units | 3,393 | 2,286 |
| Deferred Share Units | 198 | 186 |
| Weighted Average Exercise Price | Units<br><br>Exercised | |
| --- | --- | --- |
| For the twelve months ended December 31, | ($/unit) | (thousands) |
| Stock Options With Associated Net Settlement Rights Exercised for Net Cash Payment | 10.55 | 4,458 |
| Stock Options With Associated Net Settlement Rights Exercised and Net Settled for Common Shares (1) | 11.97 | 793 |
| Cenovus Replacement Stock Options Exercised and Net Settled for Cash | 7.48 | 577 |
| Cenovus Replacement Stock Options Exercised and Net Settled for Common Shares (2) | 5.17 | 37 |
(1)NSRs were net settled for 562 thousand common shares.
(2)Cenovus replacement stock options were net settled for 29 thousand common shares.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 26 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
The following table summarizes the stock-based compensation expense (recovery) recorded for all plans:
| Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|
| For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 |
| Stock Options With Associated Net Settlement Rights | 3 | 2 | 12 | 11 |
| Cenovus Replacement Stock Options | — | (4) | 1 | (5) |
| Performance Share Units | (9) | (78) | 48 | 47 |
| Restricted Share Units | 10 | (10) | 60 | 46 |
| Deferred Share Units | (1) | (9) | 5 | (2) |
| Stock-Based Compensation Expense (Recovery) | 3 | (99) | 126 | 97 |
PSUs and RSUs granted under the Performance Share Unit Plan and Restricted Share Unit Plan for Local Employees in the Asia Pacific region may only be settled in cash.
| 20. RELATED PARTY TRANSACTIONS |
|---|
A) Husky-CNOOC Madura Ltd.
The Company holds a 40 percent interest in the jointly-controlled entity HCML. The Company’s share of equity investment income (loss) related to the joint venture is recorded in (income) loss from equity-accounted affiliates.
For the twelve months ended December 31, 2024, the Company received $107 million in distributions from HCML (2023 – $93 million) and paid $nil in contributions (2023 – $35 million).
B) Husky Midstream Limited Partnership
The Company jointly owns and is the operator of HMLP. The Company holds a 35 percent interest in HMLP and applies the equity method of accounting. The Company charges HMLP for construction and management services, and incurs costs for the use of HMLP’s pipeline systems, as well as transportation and storage services.
For the twelve months ended December 31, 2024, the Company received $65 million in distributions from HMLP (2023 – $56 million) and paid $51 million in contributions (2023 – $62 million).
The following table summarizes revenues and associated expenses related to HMLP:
| Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|
| For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 |
| Revenues from Construction and Management Services | 39 | 48 | 155 | 160 |
| Transportation Expenses | 71 | 90 | 278 | 295 |
| 21. FINANCIAL INSTRUMENTS | ||||
| --- |
A) Fair Value of Non-Derivative Financial Instruments
The fair values of cash and cash equivalents, accounts receivable and accrued revenues, accounts payable and accrued liabilities, and short-term borrowings approximate their carrying amount due to the short-term maturity of these instruments.
The fair values of restricted cash, certain portions of other assets and certain portions of other liabilities approximate their carrying amount due to the specific non-tradeable nature of these instruments.
Long-term debt is carried at amortized cost. The estimated fair value of long-term debt was determined based on period-end trading prices of long-term debt on the secondary market (Level 2). As at December 31, 2024, the carrying value of Cenovus’s long-term debt was $7.5 billion and the fair value was $6.9 billion (December 31, 2023, carrying value – $7.1 billion; fair value – $6.6 billion).
The Company classifies certain private equity investments as FVOCI as they are not held for trading and fair value changes are not reflective of the Company’s operations. These assets are carried at fair value in other assets. Fair value is determined based on recent market activity which may include equity transactions of the entity when available (Level 3).
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 27 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
The following table provides a reconciliation of changes in the fair value of private equity investments classified as FVOCI:
| Total | |
|---|---|
| As at December 31, 2023 | 131 |
| Acquisitions | 7 |
| Changes in Fair Value | 81 |
| As at December 31, 2024 | 219 |
B) Fair Value of Risk Management Assets and Liabilities
Risk management assets and liabilities are carried at fair value in accounts receivable and accrued revenues, accounts payable and accrued liabilities (for short-term positions), other assets and other liabilities (for long-term positions). Changes in fair value are recorded in (gain) loss on risk management.
The Company’s risk management assets and liabilities consist of condensate and refined product futures; crude oil and natural gas futures and swaps; and renewable power, power and foreign exchange contracts. The Company may also enter into forwards and options to manage commodity, foreign exchange and interest rate exposures.
Crude oil, natural gas, condensate, refined products and power contracts are recorded at their estimated fair value based on the difference between the contracted price and the period-end forward price for the same commodity, using quoted market prices or the period-end forward price for the same commodity, extrapolated to the end of the term of the contract (Level 2). The fair value of foreign exchange rate contracts is calculated using external valuation models that incorporate observable market data and foreign exchange forward curves (Level 2).
The fair value of renewable power contracts is calculated using internal valuation models that incorporate broker pricing for relevant markets, some observable market prices and extrapolated market prices with inflation assumptions (Level 3). The fair value of renewable power contracts are calculated by Cenovus’s internal valuation team, which consists of individuals who are knowledgeable and have experience in fair value techniques.
Summary of Risk Management Positions
| December 31, 2024 | December 31, 2023 | |||||
|---|---|---|---|---|---|---|
| Risk Management | Risk Management | |||||
| As at | Asset | Liability | Net | Asset | Liability | Net |
| Crude Oil, Condensate, Natural Gas, and Refined Products | 9 | 10 | (1) | 11 | 19 | (8) |
| Power Contracts | 6 | — | 6 | 2 | — | 2 |
| Renewable Power Contracts | 5 | — | 5 | 18 | — | 18 |
| Foreign Exchange Rate Contracts | — | 3 | (3) | — | — | — |
| 20 | 13 | 7 | 31 | 19 | 12 |
The following table presents the Company’s fair value hierarchy for risk management assets and liabilities carried at fair value:
| December 31, | December 31, | |
|---|---|---|
| As at | 2024 | 2023 |
| Level 2 – Prices Sourced From Observable Data or Market Corroboration | 2 | (6) |
| Level 3 – Prices Sourced From Partially Unobservable Data | 5 | 18 |
| 7 | 12 |
The following table provides a reconciliation of changes in the fair value of Cenovus’s risk management assets and liabilities:
| Total | |
|---|---|
| As at December 31, 2023 | 12 |
| Change in Fair Value of Contracts in Place, Beginning of Year | (20) |
| Change in Fair Value of Contracts Entered Into During the Year | (30) |
| Fair Value of Contracts Realized During the Year | 46 |
| Unrealized Foreign Exchange Gain (Loss) on U.S. Dollar Contracts | (1) |
| As at December 31, 2024 | 7 |
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 28 |
| --- | --- |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
C) Earnings Impact of (Gains) Losses From Risk Management Positions
| Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|
| For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 |
| Realized (Gain) Loss | 35 | 8 | 46 | 9 |
| Unrealized (Gain) Loss | (19) | (36) | 12 | 52 |
| (Gain) Loss on Risk Management | 16 | (28) | 58 | 61 |
Realized and unrealized gains and losses on risk management are recorded in the reportable segment to which the derivative instrument relates.
| 22. RISK MANAGEMENT |
|---|
Cenovus is exposed to financial risks, including market risk related to commodity prices, foreign exchange rates, interest rates and commodity power prices, as well as credit risk and liquidity risk.
As at December 31, 2024, the fair value of risk management positions was a net asset of $7 million. As at December 31, 2024, there were foreign exchange contracts with a notional value of US$250 million (December 31, 2023 – $nil) and no interest rate contracts or cross currency interest rate swap contracts outstanding (December 31, 2023 – $nil).
Net Fair Value of Risk Management Positions
| As at December 31, 2024 | Notional Volumes (1) (2) | Terms (3) | Weighted<br><br>Average<br><br>Price (2) | Fair Value Asset (Liability) |
|---|---|---|---|---|
| WTI Contracts Related to Blending (4) | ||||
| WTI Fixed – Sell | 1.6 MMbbls | January 2025 - November 2025 | US$70.18/bbl | (3) |
| WTI Fixed – Buy | 0.3 MMbbls | January 2025 - November 2025 | US$72.80/bbl | (1) |
| Power Contracts | 6 | |||
| Renewable Power Contracts | 5 | |||
| Other Financial Positions (5) | 3 | |||
| Foreign Exchange Rate Contracts | (3) | |||
| Total Fair Value | 7 |
(1) Million barrels (“MMbbls”).
(2) Notional volumes and weighted average price are based on multiple contracts of varying amounts and terms over the respective time period; therefore, the notional volumes and weighted average price may fluctuate from month to month.
(3) Includes individual contracts with varying terms, the longest of which is 14 months.
(4) WTI contracts related to blending are used to help manage price exposure to condensate used for blending.
(5) Includes risk management positions related to WCS, heavy oil, light oil and condensate differentials, benchmark delivery location spreads, Belvieu fixed price contracts, reformulated blendstock for oxygenate blending gasoline contracts, heating oil and natural gas fixed price contracts and the Company’s U.S. refining and marketing activities.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 29 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
A) Commodity Price and Foreign Exchange Rate Risk
Sensitivities
The following table summarizes the sensitivity of the fair value of Cenovus’s risk management positions to independent fluctuations in commodity prices and foreign exchange rates, with all other variables held constant. Management believes the fluctuations identified in the table below are a reasonable measure of volatility.
The impact of fluctuating commodity prices and foreign exchange rates on the Company’s open risk management positions could have resulted in an unrealized gain (loss) impacting earnings before income tax as follows:
| As at December 31, 2024 | Sensitivity Range | Increase | Decrease |
|---|---|---|---|
| Crude Oil and Condensate Commodity Price | ± US$10.00/bbl Applied to WTI, Condensate and Related Hedges | — | — |
| Crude Oil and Condensate Differential Price (1) | ± US$2.50/bbl Applied to Differential Hedges Tied to Production | 20 | (20) |
| WCS (Hardisty) Differential Price | ± US$2.50/bbl Applied to WCS Differential Hedges Tied to Production | (6) | 6 |
| Refined Products Commodity Price | ± US$10.00/bbl Applied to Heating Oil and Gasoline Hedges | (3) | 3 |
| Natural Gas Commodity Price | ± US$0.50/Mcf Applied to Natural Gas Hedges Tied to Production | — | — |
| Natural Gas Basis Price | ± US$0.25/Mcf Applied to Natural Gas Basis Hedges | 1 | (1) |
| Power Commodity Price | ± C$10.00/MWh (2) Applied to Power Hedges | 46 | (46) |
| U.S. to Canadian Dollar Exchange Rate | ± $0.05 in the U.S. to Canadian Dollar Exchange Rate | 24 | (28) |
(1)Excluding WCS at Hardisty.
(2)One thousand kilowatts of electricity per hour (“MWh”).
B) Credit Risk
Credit risk arises from the potential that the Company may incur a financial loss if a counterparty to a financial instrument fails to meet its financial or performance obligations in accordance with agreed terms. Cenovus assesses the credit risk of new counterparties and continues risk-based monitoring of all counterparties on an ongoing basis. A substantial portion of Cenovus’s accounts receivable are with customers in the oil and gas industry and are subject to normal industry credit risks.
As at December 31, 2024, approximately 79 percent (December 31, 2023 – 83 percent) of the Company’s accounts receivable and accrued revenues were with investment grade counterparties, and 96 percent of the Company’s accounts receivable were outstanding for less than 60 days. The associated average expected credit loss on these accounts was 0.4 percent as at December 31, 2024 (December 31, 2023 – 0.4 percent).
C) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet all of its financial obligations as they become due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price.
As disclosed in Note 13, over the long term, Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times at a WTI price of US$45.00 per barrel to manage the Company’s overall debt position.
Undiscounted cash outflows relating to financial liabilities are:
| As at December 31, 2024 | 1 Year | Years 2 and 3 | Years 4 and 5 | Thereafter | Total |
|---|---|---|---|---|---|
| Accounts Payable and Accrued Liabilities (1) | 6,242 | — | — | — | 6,242 |
| Short-Term Borrowings | 173 | — | — | — | 173 |
| Lease Liabilities (2) | 538 | 824 | 645 | 2,606 | 4,613 |
| Long-Term Debt (2) | 526 | 1,910 | 1,989 | 7,286 | 11,711 |
(1)Includes current risk management liabilities.
(2)Principal and interest, including current portion, if applicable.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 30 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
| 23. SUPPLEMENTARY CASH FLOW INFORMATION |
|---|
A) Working Capital
| December 31, | December 31, | |
|---|---|---|
| As at | 2024 | 2023 |
| Total Current Assets | 10,434 | 9,708 |
| Total Current Liabilities | 7,362 | 6,210 |
| Working Capital | 3,072 | 3,498 |
B) Changes in Non-Cash Working Capital
| Three Months Ended | Twelve Months Ended | |||
|---|---|---|---|---|
| For the periods ended December 31, | 2024 | 2023 | 2024 | 2023 |
| Accounts Receivable and Accrued Revenues | 221 | 1,411 | 547 | 314 |
| Income Tax Receivable | 8 | (283) | 199 | (295) |
| Inventories | (216) | 559 | (117) | 216 |
| Accounts Payable and Accrued Liabilities | 239 | (754) | 299 | (685) |
| Income Tax Payable | 226 | (56) | 322 | (1,112) |
| Total Change in Non-Cash Working Capital | 478 | 877 | 1,250 | (1,562) |
| Net Change in Non-Cash Working Capital – Operating Activities | 492 | 949 | 1,305 | (1,193) |
| Net Change in Non-Cash Working Capital – Investing Activities | (14) | (72) | (55) | (369) |
| Total Change in Non-Cash Working Capital | 478 | 877 | 1,250 | (1,562) |
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 31 | |||
| --- | --- |
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
C) Reconciliation of Liabilities
The following table provides a reconciliation of liabilities to cash flows arising from financing activities:
| Dividends Payable | Warrants | Short-Term Borrowings | Long-Term Debt | Lease Liabilities | |
|---|---|---|---|---|---|
| As at December 31, 2022 | 9 | — | 115 | 8,691 | 2,836 |
| Changes From Financing Cash Flows: | |||||
| Net Issuance (Repayment) of Short-Term Borrowings | — | — | 58 | — | — |
| Repayment of Long-Term Debt | — | — | — | (1,346) | — |
| Principal Repayment of Leases | — | — | — | — | (288) |
| Dividends Paid | (1,026) | — | — | — | — |
| Payment for Purchase of Warrants | — | (711) | — | — | — |
| Finance and Transaction Costs | — | (2) | — | — | — |
| Non-Cash Changes: | |||||
| Net Premium (Discount) on Redemption of Long-Term Debt | — | — | — | (84) | — |
| Finance and Transaction Costs | — | 2 | — | (19) | — |
| Lease Acquisitions | — | — | — | — | 33 |
| Lease Additions | — | — | — | — | 57 |
| Base Dividends Declared on Common Shares | 990 | — | — | — | — |
| Dividends Declared on Preferred Shares | 36 | — | — | — | — |
| Warrants Purchased and Cancelled | — | 711 | — | — | — |
| Exchange Rate Movements and Other | — | — | 6 | (134) | 20 |
| As at December 31, 2023 | 9 | — | 179 | 7,108 | 2,658 |
| Changes From Financing Cash Flows: | |||||
| Net Issuance (Repayment) of Short-Term Borrowings | — | — | 5 | — | — |
| Principal Repayment of Leases | — | — | — | — | (299) |
| Dividends Paid | (1,551) | — | — | — | — |
| Non-Cash Changes: | |||||
| Finance and Transaction Costs | — | — | — | (16) | — |
| Lease Additions | — | — | — | — | 363 |
| Base Dividends Declared on Common Shares | 1,255 | — | — | — | — |
| Variable Dividends Declared on Common Shares | 251 | — | — | — | — |
| Dividends Declared on Preferred Shares | 36 | — | — | — | — |
| Exchange Rate Movements and Other | — | — | (11) | 442 | 205 |
| As at December 31, 2024 | — | — | 173 | 7,534 | 2,927 |
| 24. COMMITMENTS AND CONTINGENCIES | |||||
| --- |
A) Commitments
Cenovus has entered into various commitments in the normal course of operations. Commitments that have original maturities less than one year are excluded from the table below. Future payments for the Company’s commitments are below:
| As at December 31, 2024 | 1 Year | 2 Years | 3 Years | 4 Years | 5 Years | Thereafter | Total |
|---|---|---|---|---|---|---|---|
| Transportation and Storage (1) (2) | 2,122 | 1,947 | 1,921 | 1,904 | 1,815 | 14,551 | 24,260 |
| Product Purchases | 14 | — | — | — | — | — | 14 |
| Real Estate | 63 | 63 | 61 | 59 | 63 | 532 | 841 |
| Obligation to Fund HCML | 104 | 105 | 98 | 56 | 44 | 105 | 512 |
| Other Long-Term Commitments | 411 | 191 | 187 | 158 | 117 | 589 | 1,653 |
| Total Commitments | 2,714 | 2,306 | 2,267 | 2,177 | 2,039 | 15,777 | 27,280 |
(1)Includes transportation commitments that are subject to regulatory approval or were approved but are not yet in service of $854 million. Terms are up to 20 years on commencement.
(2)As at December 31, 2024, includes $1.8 billion related to transportation and storage commitments with HMLP.
There were outstanding letters of credit aggregating to $355 million (December 31, 2023 – $364 million) issued as security for financial and performance conditions under certain contracts.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 32 |
|---|
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended December 31, 2024
B) Contingencies
Legal Proceedings
Cenovus is involved in a limited number of legal claims associated with the normal course of operations. Cenovus believes that any liabilities that might arise from such matters, to the extent not provided for, are not likely to have a material effect on its interim Consolidated Financial Statements.
Income Tax Matters
The tax regulations and legislation and interpretations thereof in the various jurisdictions in which Cenovus operates are continually changing. As a result, there are usually a number of tax matters under review. Management believes that the provision for taxes is adequate.
| 25. PRIOR PERIOD REVISIONS |
|---|
During the three months ended December 31, 2024, it was identified that certain transactions in the U.S Refining segment undertaken in contemplation of each other were reported on a gross basis in revenues and purchased product rather than on a net basis. As a result, revenues and purchased product were overstated for the nine months ended September 30, 2024. Prior quarters have been restated to reflect the change. There was no impact on net earnings (loss), segment income (loss), cash flows or financial position.
The following tables reconcile the amounts previously reported in the Consolidated Statements of Comprehensive Income (Loss) and segmented disclosures to the corresponding revised amounts:
| U.S. Refining Segment | Consolidated | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| For the three months ended <br>March 31, 2024 | Previously Reported | Revisions | Revised Balance | Previously Reported | Revisions | Revised Balance | ||||||||
| Revenues | 7,235 | (334) | 6,901 | 13,397 | (334) | 13,063 | ||||||||
| Purchased Product | 6,132 | (334) | 5,798 | 6,133 | (334) | 5,799 | ||||||||
| Transportation and Blending | — | — | — | 2,575 | — | 2,575 | ||||||||
| Purchased Product, Transportation<br><br>and Blending (1) | 6,132 | (334) | 5,798 | 8,708 | (334) | 8,374 | ||||||||
| 1,103 | — | 1,103 | 4,689 | — | 4,689 | U.S. Refining Segment | Consolidated | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| For the three months ended <br>June 30, 2024 | Previously Reported | Revisions | Revised Balance | Previously Reported | Revisions | Revised Balance | ||||||||
| Revenues | 7,918 | (303) | 7,615 | 14,885 | (303) | 14,582 | ||||||||
| Purchased Product | 7,124 | (303) | 6,821 | 7,184 | (303) | 6,881 | ||||||||
| Transportation and Blending | — | — | — | 2,865 | — | 2,865 | ||||||||
| Purchased Product, Transportation<br><br>and Blending (1) | 7,124 | (303) | 6,821 | 10,049 | (303) | 9,746 | ||||||||
| 794 | — | 794 | 4,836 | — | 4,836 | U.S. Refining Segment | Consolidated | |||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||||
| For the three months ended <br>September 30, 2024 | Previously Reported | Revisions | Revised Balance | Previously Reported | Revisions | Revised Balance | ||||||||
| Revenues | 7,648 | (430) | 7,218 | 14,249 | (430) | 13,819 | ||||||||
| Purchased Product | 7,284 | (430) | 6,854 | 7,556 | (430) | 7,126 | ||||||||
| Transportation and Blending | — | — | — | 2,489 | — | 2,489 | ||||||||
| Purchased Product, Transportation<br><br>and Blending (1) | 7,284 | (430) | 6,854 | 10,045 | (430) | 9,615 | ||||||||
| 364 | — | 364 | 4,204 | — | 4,204 |
(1)Revised presentation as of January 1, 2024. See Note 3.
| Cenovus Energy Inc. – Q4 2024 Interim Consolidated Financial Statements | 33 |
|---|