6-K - CVE - Equibles

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 April 2022

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): ☐

Exhibit 99.2, 99.3 and 99.4 to this report, furnished on Form 6-K, shall be incorporated by reference into or as an exhibit to, as applicable, each of the registrant’s Registration Statements under the Securities Act of 1933, as amended: Form F-10 (File No. 333-259814), Form S-8 (File Nos. 333-163397 and 333-251886), Form F-3D (File No. 333-202165).

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: April 27, 2022

CENOVUS ENERGY INC.
(Registrant)
By:	/s/ Natasha L.S. Dhillon-Penner
---	---	---
	Name:	Natasha L.S. Dhillon-Penner
	Title:	Assistant Corporate Secretary

Form 6-K Exhibit Index

Exhibit No.
99.1	News Release dated April 27, 2022
99.2	Management’s Discussion and Analysis dated April 26, 2022 for the period ended March 31, 2022
99.3	Interim Consolidated Financial Statements (unaudited) for the period ended March 31, 2022
99.4	Supplemental Financial Information (unaudited) – Consolidated Interest Coverage Ratios Exhibit to March 31, 2022 Interim Consolidated Financial Statements
99.5	Form 52-109F2 Full Certificate, dated April 27, 2022, of Alex J. Pourbaix, President & Chief Executive Officer
99.6	Form 52-109F2 Full Certificate, dated April 27, 2022, of Jeffrey R. Hart, Executive Vice-President & Chief Financial Officer

Document

	Exhibit 99.1
News release

                 ![image_1.jpg](image_1.jpg)

Cenovus announces shareholder returns plan, triples dividend

Company releases first-quarter operating and financial results

Calgary, Alberta (April 27, 2022) – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) is further increasing shareholder returns on the strength of its balance sheet and ongoing reliability of its operating performance. The company’s Board of Directors has approved tripling the base dividend starting with the second quarter of 2022, as well as a plan for additional increases to shareholder returns. Beyond the base dividend increase, Cenovus will target to return 50% of quarterly excess free funds flow to shareholders when reported net debt is less than $9 billion. The company will do this through share buybacks and/or variable dividends while also continuing to pay down the balance sheet. Cenovus has adopted an ultimate net debt target of $4 billion. When reported net debt is at the $4 billion floor, Cenovus will target to return 100% of that quarter’s excess free funds flow to shareholders through share buybacks and/or variable dividends.

“We have consistently delivered on our commitments to our shareholders,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “After rapidly deleveraging our balance sheet, we are now able to provide a much clearer picture of how we will position Cenovus for the longer term – as a leader in delivering total shareholder returns.”

First-quarter results highlights

•Total upstream production of approximately 800,000 barrels of oil equivalent per day (BOE/d)1.

•Total downstream throughput of 502,000 barrels per day (bbls/d).

•$1.4 billion cash from operating activities, $2.6 billion adjusted funds flow, $1.8 billion free funds flow.

•Total long-term debt of $11.7 billion and net debt of $8.4 billion as at March 31, 2022.

Financial, production & throughput summary
Financial, production & throughput summary
(For the period ended March 31)	2021 Q4	% change	2021 Q1	% change
Financial ( millions, except per share amounts)
Cash from operating activities	2,184	(38)	228	499
Adjusted funds flow2	1,948	33	1,141	126
Per share (basic)2	0.97		0.57
Capital investment	835	(11)	547	36
Free funds flow2	1,113	65	594	209
Net earnings (loss)	(408)		220	639
Per share (basic)	(0.21)		0.10
Long-term debt	12,385	(5)	13,947	(16)
Net debt	9,591	(12)	13,340	(37)
Production and throughput (before royalties, net to Cenovus)
Oil and NGLs (bbls/d)1	678,300	(4)	620,100	6
Conventional natural gas (MMcf/d)	884	(2)	895	(3)
Total upstream production (BOE/d)1	825,300	(3)	769,300	4
Total downstream throughput (bbls/d)	469,900	7	469,100	7

All values are in US Dollars.

1See Advisory for production by product type.

2Non-GAAP financial measure or contains a non-GAAP financial measure. See Advisory.

2022 capital budget and guidance update

To reflect significant changes in the commodity pricing environment as well as the disposition of the Tucker and Wembley assets in the first quarter, Cenovus has updated its 2022 corporate guidance. It is available on Cenovus’s website under Investors.

Changes to 2022 guidance include a $300 million increase to total capital expenditures for the year to an updated range of $2.9 billion to $3.3 billion, entirely related to an increase in projected capital spend to complete the Superior Refinery rebuild in 2022. The rebuild is now expected to cost a total of about US$1.2 billion, up from approximately US$950 million due to several factors, including higher labour costs, COVID-19 pandemic-related expenses, inflation and supply chain constraints. As a result, expected 2022 capital spend for the Superior rebuild has increased to between C$500 million and C$550 million.

The 2022 guidance changes also include increases to expected unit operating expenses across the Upstream business, reflecting impacts of anticipated continued strength in the outlook for natural gas prices. At the same time, higher gas prices are expected to drive improved realized pricing in Cenovus’s Conventional business, with this offset reflected in the company’s relatively low overall sensitivity to AECO natural gas prices. The guidance range for expected cash taxes for the year has increased to between $1.4 billion and $1.7 billion, reflecting higher commodity price assumptions.

Shareholder returns plan and capital allocation framework

The company has further defined its capital allocation framework to ensure continued balance sheet strength and increased clarity around delivering returns to shareholders across price environments.

Capital allocation framework

Maintaining a strong balance sheet with the resilience to withstand price volatility and capitalize on opportunities throughout the commodity cycle is a key element of Cenovus’s capital allocation framework. As such, up to 50% of excess free funds flow will continue to be allocated towards reducing net debt until Cenovus reaches its net debt floor of $4 billion, which represents approximately one times net debt to adjusted funds flow at about US$45 West Texas Intermediate (WTI).

Excess free funds flow will be calculated as free funds flow:

•minus base dividends paid on common shares in the quarter,

•minus dividends paid on preferred shares in the quarter,

•minus other uses of cash (including decommissioning liabilities and principal repayment of leases) in the quarter,

•minus any acquisition costs from acquisition activities closing in the quarter,

•plus any proceeds from divestiture activities closing in the quarter.

Cenovus will continue to maintain capital discipline, with the five-year business plan outlined at the company’s Investor Day in December 2021 remaining in place and instrumental to growing shareholder returns. The company will also continue to ensure the business is appropriately funded and reinvestment in the business will continue to be evaluated under the company’s existing capital framework.

CENOVUS ENERGY NEWS RELEASE | 2

Shareholder returns

Beginning with the second quarter of 2022, the base dividend will increase from $0.14 per share to $0.42 per share annually, and will continue to be declared and paid quarterly, at the discretion of the Board. The base dividend continues to be a structural component of the financial framework and is set at a level that Cenovus is confident can be sustainably covered at bottom of the cycle pricing of about US$45 WTI, with ample room to grow over the next five years.

Based on the capital allocation framework described above, in addition to base dividends Cenovus plans to deliver incremental shareholder returns as follows:

•When quarter-end net debt is less than $9 billion, the company will target to deliver to shareholders 50% of that quarter’s excess free funds flow in the form of share buybacks and/or variable dividends.

•When quarter-end net debt is at the $4 billion floor, the company will target to deliver to shareholders 100% of that quarter’s excess free funds flow in the form of share buybacks and/or variable dividends.

•Share buybacks will be the preferred mechanism and will continue to be executed opportunistically, driven by return thresholds. Where the value of share buybacks in a quarter is less than the targeted value of returns, the remainder will be delivered through variable dividends paid in the following quarter. Where the value of share buybacks in a quarter is greater than the targeted value of returns, no variable dividend will be paid for that quarter.

Any variable dividends will be paid to shareholders on a quarterly basis, one month following the declaration date. This shareholder returns framework will start with the second quarter of 2022.

First-quarter results

In the first quarter of 2022, Cenovus continued to deliver strong operating and financial results, driven by the company’s top-tier asset base, the safe and reliable performance of its facilities, the company’s low cost structure and the rise in benchmark commodity prices.

Operating results1

Cenovus’s total revenues in the first quarter increased to $16.2 billion from $13.7 billion in the previous quarter, driven by higher average realized sales prices for the company’s products across the Upstream and Downstream businesses. Total operating margin1 was $3.5 billion, compared with $2.6 billion in the fourth quarter. Upstream first-quarter revenues were $9.7 billion, compared with $7.4 billion in the previous quarter. Upstream operating margin2 was more than $2.9 billion, compared with about $2.6 billion in the fourth quarter, with the difference driven by higher realized sales prices and sales volumes, and, as condensate prices continued to rise through the first quarter, the ability to process condensate purchased earlier in the quarter. Downstream revenues were $8.2 billion in the quarter, compared with $8.1 billion in the fourth quarter of 2021. Downstream operating margin4 was up, to $544 million in the first quarter from $42 million in the fourth quarter, with the difference due to U.S. Manufacturing operating margin of $423 million in the quarter compared to an operating margin shortfall of $97 million for that segment in the fourth quarter of 2021.

1Non-GAAP financial measure. Total operating margin is the total of Upstream operating margin plus Downstream operating margin. See Advisory.

2Specified financial measure. See Advisory.

CENOVUS ENERGY NEWS RELEASE | 3

Cenovus produced nearly 800,000 BOE/d in the first quarter, in line with fourth-quarter production of just over 825,000 BOE/d after adjusting for the January 31 sale of the company’s Tucker oil sands asset. Christina Lake production continued to increase, reaching 254,100 bbls/d in the quarter from 250,900 bbls/d in the previous quarter as the company’s ongoing redrill and redevelopment program brought new volumes online. Foster Creek production of 197,900 bbls/d in the first quarter, compared with 211,800 bbls/d in the fourth quarter, reflected expected reductions in volumes from new wells brought on in late 2021 and was in line with the company’s full-year production guidance for 2022. At the Lloydminster thermal projects, first-quarter production was in line with the previous quarter, and the 10,000 bbls/d Spruce Lake North facility remains on track for start-up later this year. Conventional production was 125,000 BOE/d in the quarter, down from 133,000 BOE/d in the fourth quarter, with the difference reflecting the disposition of the Wembley assets in the first quarter. Offshore production was 76,400 BOE/d in the first quarter compared with 73,100 BOE/d in the fourth quarter.

The Canadian Manufacturing segment had crude utilization of 89% and throughput of 98,100 bbls/d, compared with 98% and 108,300 bbls/d in the fourth quarter. The decreased throughput was mainly due to ramping down activity in preparation for planned maintenance in April at the Lloydminster Upgrader, as well as an unplanned outage in March. The Lloydminster Refinery continued to deliver reliable performance during the first quarter and will undergo a turnaround following maintenance at the Upgrader. Canadian Manufacturing had first-quarter operating margin of $114 million compared with $131 million in the fourth quarter due to the lower throughput.

In the U.S. Manufacturing segment, crude utilization of 80% and throughput of 403,700 bbls/d were both up from 72% and 361,600 bbls/d in the fourth quarter of 2021 when there was a planned turnaround at the Lima Refinery. The increase in throughput from the previous quarter, combined with strategic optimization activities, higher sales volumes and rising market crack spreads, drove a significantly improved operating margin of $423 million in the first quarter compared with an operating margin shortfall of $97 million in the fourth quarter. The significant improvement in operating margin from the previous quarter was somewhat offset by the impact of turnaround activity that commenced in March at the Wood River and Borger refineries, and the Lima Refinery running at less than full rates through January following the turnaround, as well as a reduced slate of refined products in February. The Lima Refinery returned to normal operations in March, positioning it for continued growth for the rest of the year.

The turnaround activity underway at the Wood River and Borger refineries is expected to be completed in the middle of the second quarter. A scheduled turnaround at the Toledo Refinery began in mid-April. After the second quarter, Cenovus expects to have completed most of its planned major maintenance this year, positioning the company for even stronger operational momentum in the second half of the year. Further information on Cenovus’s significant planned maintenance activity in 2022 is provided below under 2022 planned maintenance.

Financial results

Cash from operating activities was $1.4 billion and adjusted funds flow was $2.6 billion in the quarter. Free funds flow of more than $1.8 billion included capital investment of $746 million, primarily to sustain production and throughput levels and continue work on the Superior Refinery rebuild project. Long-term debt was reduced to $11.7 billion as at March 31, 2022, down from $12.4 billion at the end of the fourth quarter of 2021. Net debt was reduced to $8.4 billion as at March 31, 2022, down nearly $1.2 billion from

CENOVUS ENERGY NEWS RELEASE | 4

December 31, 2021, and the company expects to reach its interim net debt target of below $8 billion imminently. A build in non-cash working capital of $1.2 billion, mainly attributable to an increase in accounts receivable and the impact of higher commodity prices on product inventory, affected the extent of debt reduction in the quarter.

Cash flows were impacted in the first quarter by a previously announced realized risk management loss of $974 million related to Cenovus’s risk management program. With the significant deleveraging of its balance sheet over the past year and its strong liquidity position, Cenovus announced on April 4, 2022 that its crude oil sales price risk management activities related to WTI are no longer required to support financial resilience by providing increased cash flow certainty. The company expects to close the bulk of its outstanding WTI price risk management positions related to crude oil sales over the next month and anticipates no significant financial exposure to WTI sales price risk management contracts beyond the second quarter of 2022.

Cenovus closed the sale of its Tucker asset in the Oil Sands segment for net proceeds of $730 million and its Wembley assets in the Conventional business for net proceeds of approximately $220 million in the quarter. The previously announced $420 million sale of the company’s retail fuels network continues to progress through regulatory approvals, with an anticipated close in the third quarter of 2022.

Cenovus recorded net earnings of $1.6 billion in the first quarter, compared with a net loss of $408 million in the fourth quarter. The difference in net earnings was primarily due to fourth-quarter earnings being impacted by an impairment of $1.9 billion recorded at December 31, 2021, as well as increased operating margin, higher gains on asset divestitures and income of $269 million from Superior rebuild insurance proceeds in the first quarter, as well as lower general and administrative costs partially offset by unrealized risk management losses and a higher re-measurement loss on the contingent payment in the first quarter.

2022 planned maintenance

The following table provides details on planned turnaround activities at Cenovus assets in 2022 and anticipated production or throughput impacts. These planned turnarounds were already reflected in Cenovus’s original 2022 Corporate Guidance announced in December 2021 and remain reflected in the updated guidance.

2022 Planned maintenance
Potential quarterly production/throughput impact (Mbbls/d)
	Q2	Q3	Q4
Upstream
Foster Creek		11 - 14	5 - 8
Christina Lake	14 - 17
Lloydminster Thermals	2 - 3	1 - 2
Downstream
Lloydminster Upgrader	9 - 14
Lloydminster Refinery	11 - 16
U.S. Manufacturing	60 - 70	20 - 25	10 - 15

Dividend declarations and share purchases

Given the strength of Cenovus’s balance sheet, the Board has declared a dividend of $0.105 per share, payable on June 30, 2022 to common shareholders of record as of June 15, 2022.

CENOVUS ENERGY NEWS RELEASE | 5

The Board also declared a second-quarter dividend on each of the Cumulative Redeemable First Preferred Shares – Series 1, Series 2, Series 3, Series 5 and Series 7 – payable on June 30, 2022 to shareholders of record as of June 15, 2022 as follows:

Preferred shares dividend summary
	Rate (%)	Amount ($/share)
Share series
Series 1	2.577	0.16106
Series 2	2.348	0.14635
Series 3	4.689	0.29306
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.

Cenovus continues to execute share purchases under its ongoing normal course issuer bid (NCIB) program, approved in the fourth quarter of 2021, which allows the company to purchase up to 146.5 million of its common shares. As of April 26, 2022, Cenovus has purchased approximately 58 million common shares, delivering over $1 billion in returns to shareholders under its NCIB to date.

Sustainability

Cenovus plans to release its 2021 environmental, social and governance (ESG) report mid-year, providing more details about how the company expects to achieve the targets for its five ESG focus areas: climate & greenhouse gas (GHG) emissions, water stewardship, biodiversity, Indigenous reconciliation and inclusion & diversity.

The Oil Sands Pathways to Net Zero Alliance, jointly founded by Cenovus, continued work on its foundational carbon capture, utilization and storage project. Discussions are ongoing with the federal government to determine how the recently announced investment tax credit for carbon capture projects will be implemented. Based on the Pathways Alliance’s initial assessment, the tax credit is a positive step in the Alliance’s efforts to work collaboratively with governments to help Canada achieve its climate goals and ensure the country can be the world’s preferred supplier of responsibly produced oil. The Alliance is also progressing work to assess the feasibility of multiple other GHG-reducing technologies.

In addition, Cenovus is progressing work on three new carbon capture and storage projects at the Lloydminster Upgrader, Minnedosa Ethanol Plant and Elmworth gas plant, which are outlined in the company’s five-year plan and expected to be operating in the next five years.

CENOVUS ENERGY NEWS RELEASE | 6

Conference call today 9 a.m. Mountain Time (11 a.m. Eastern Time) Cenovus will host a conference call today, April 27, 2022, starting at 9 a.m. MT (11 a.m. ET). To participate, please dial 888-204-4368 (toll-free in North America) or 647-794-4605 approximately 10 minutes prior to the conference call. A live audio webcast of the conference call will also be available. The webcast will be archived for approximately 90 days. 1 p.m. Mountain Time (3 p.m. Eastern Time) Cenovus will host its Annual Meeting of Shareholders today, April 27, 2022, in a virtual format beginning at 1 p.m. MT (3 p.m. ET). The webcast link to the Shareholders Meeting will be available under Presentations and Events in the Investors section of cenovus.com.

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).

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 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.

CENOVUS ENERGY NEWS RELEASE | 7

Product types

Product type by operating segment
	Three months ended<br><br>March 31, 2022
Oil Sands
Bitumen (Mbbls/d)	578.8
Heavy crude oil (Mbbls/d)	16.2
Conventional natural gas (MMcf/d)	12.8
Total Oil Sands segment production (BOE/d)	597.0
Conventional
Light crude oil (Mbbls/d)	8.2
Natural gas liquids (Mbbls/d)	24.5
Conventional natural gas (MMcf/d)	555.0
Total Conventional segment production (BOE/d)	125.2
Offshore
Light crude oil (Mbbls/d)	13.7
Natural gas liquids (Mbbls/d)	13.1
Conventional natural gas (MMcf/d)	297.5
Total Offshore segment production (BOE/d)	76.4
Total upstream production (BOE/d)	798.6

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, including the U.S. Private Securities Litigation Reform Act of 1995, about Cenovus’s current expectations, estimates and projections about the future of the company, based on certain assumptions made in light of 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 “achieve”, “anticipate”, “commit”, “continue”, “deliver”, “expect”, “focus”, “positioned”, “target”, and “will” or similar expressions and includes suggestions of future outcomes, including, but not limited to, statements about: general and 2022 priorities; allocation of excess free funds flow to shareholder returns and net debt reduction; net debt, long-term debt and maintaining the net debt floor; timing of the Superior rebuild; timing of planned maintenance turnarounds and throughput impact; closing outstanding WTI price risk management positions; closing of the retail fuels network sale; upstream production, downstream operations and performance; maintaining capital discipline while growing total shareholder returns beyond the base dividend through share buybacks under the NCIB and variable dividends; ESG focus areas and targets, including GHG emissions reductions through the Oilsands Pathways to Net Zero Alliance; and progressing GHG-reducing technologies, including carbon capture and storage projects.

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

CENOVUS ENERGY NEWS RELEASE | 8

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 to reducing net debt to between $9 billion and $4 billion; compliance costs, 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 updated 2022 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 prices, operating and capital costs and currency and interest rates; risks inherent in the operation of Cenovus’s business; ability to successfully complete development plans and improve asset performance; and risks associated with climate change and Cenovus’s assumptions relating thereto.

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 Management’s Discussion and Analysis (MD&A) for the periods ended December 31, 2021 and March 31, 2022, 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 sedar.com, 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. Readers should not consider these measures in isolation or as a substitute for analysis of the company’s results as reported under IFRS. 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 our MD&A for the period ended March 31, 2022, (available on SEDAR at sedar.com, 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 | 9

	Upstream		Downstream		Total
Three Months Ended ($ millions)	March 31, 2022 (1)	December 31, 2021 (2)	March 31, 2022 (1)	December 31, 2021 (2)	March 31, 2022	December 31, 2021
Revenues
Gross Sales	10,897	8,237	8,247	8,135	19,144	16,372
Less: Royalties	1,185	815	-	-	1,185	815
	9,712	7,422	8,247	8,135	17,959	15,557
Expenses
Purchased Product	2,089	1,410	6,946	7,348	9,035	8,758
Transportation and Blending	2,923	2,387	2	-	2,925	2,387
Operating	909	865	645	689	1,554	1,554
Realized (Gain) Loss on Risk Management	871	202	110	56	981	258
Operating Margin	2,920	2,558	544	42	3,464	2,600

(1)Found in Note 1 of the March 31, 2022, interim Consolidated Financial Statements.

(2)Found in Note 1 of the December 31, 2021, interim Consolidated Financial Statements.

Adjusted Funds Flow and Free Funds Flow

The following table provides a reconciliation of cash from (used in) operating activities found in our Consolidated Financial Statements to Adjusted Funds Flow and Free Funds Flow. Adjusted Funds Flow per share is calculated by dividing Adjusted Funds Flow by the weighted average number of common shares outstanding during the period and may be useful to evaluate a company’s ability to generate cash.

Three Months Ended ($ millions)	March 31,<br><br>2022	December 31, 2021	March 31, 2021
Cash From (Used in) Operating Activities (1)	1,365	2,184	228
(Add) Deduct:
Settlement of Decommissioning Liabilities	(19)	(35)	(11)
Net Change in Non-Cash Working Capital	(1,199)	271	(902)
Adjusted Funds Flow	2,583	1,948	1,141
Capital Investment	746	835	547
Free Funds Flow	1,837	1,113	594

(1)Found in the March 31, 2022, or December 31, 2021, 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, Twitter, LinkedIn, YouTube and Instagram.

Cenovus contacts

Investors	Media
Investor Relations general line<br><br>403-766-7711	Media Relations general line<br><br>403-766-7751

CENOVUS ENERGY NEWS RELEASE | 10

Document

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the period ended March 31, 2022
OVERVIEW OF CENOVUS	2
---	---
QUARTERLY RESULTS OVERVIEW	5
OPERATING AND FINANCIAL RESULTS	7
COMMODITY PRICES UNDERLYING OUR FINANCIAL RESULTS	12
COMMODITY PRICE OUTLOOK	15
REPORTABLE SEGMENTS	16
UPSTREAM	16
OIL SANDS	16
CONVENTIONAL	20
OFFSHORE	22
DOWNSTREAM	25
CANADIAN MANUFACTURING	25
U.S. MANUFACTURING	27
RETAIL	29
CORPORATE AND ELIMINATIONS	30
LIQUIDITY AND CAPITAL RESOURCES	32
RISK MANAGEMENT AND RISK FACTORS	36
CRITICAL ACCOUNTING JUDGMENTS, ESTIMATION UNCERTAINTIES AND ACCOUNTING POLICIES	37
CONTROL ENVIRONMENT	37
ADVISORY	38
ABBREVIATIONS	41
SPECIFIED FINANCIAL MEASURES	41

This Management’s Discussion and Analysis (“MD&A”) for Cenovus Energy Inc. (which includes references to “we”, “our”, “us”, “its”, the “Company”, or “Cenovus”, and means Cenovus Energy Inc., the subsidiaries of, and partnership interests held by, Cenovus Energy Inc. and its subsidiaries) dated April 26, 2022 should be read in conjunction with our March 31, 2022 unaudited interim Consolidated Financial Statements and accompanying notes (“interim Consolidated Financial Statements”), the December 31, 2021 audited Consolidated Financial Statements and accompanying notes (“Consolidated Financial Statements”) and the December 31, 2021 MD&A (“annual MD&A”). All of the information and statements contained in this MD&A are made as of April 26, 2022 unless otherwise indicated. This MD&A contains forward-looking information about our current expectations, estimates, projections and assumptions. See the Advisory for information on the risk factors that could cause actual results to differ materially and the assumptions underlying our forward-looking information. Cenovus management (“Management”) prepared the MD&A. The interim MD&As and the annual MD&A are reviewed by the Audit Committee and recommended for approval by the Cenovus Board of Directors (“the Board”). Additional information about Cenovus, including our annual reports, the Annual Information Form (“AIF”) and Form 40-F, is available on SEDAR at sedar.com, on EDGAR at sec.gov, and on our website at cenovus.com. Information on or connected to our website, even if referred to in this MD&A, does not constitute part of this MD&A.

Basis of Presentation

This MD&A and the interim Consolidated Financial Statements and comparative information have been prepared in Canadian dollars, (which includes references to “dollar” or “$”), except where another currency has been indicated, and in accordance with International Financial Reporting Standards (“IFRS” or “GAAP”) as issued by the International Accounting Standards Board. Production volumes are presented on a before royalties basis. Refer to the Abbreviations section for commonly used oil and gas terms.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	1
OVERVIEW OF CENOVUS
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We are a Canadian-based integrated energy company headquartered in Calgary, Alberta. Our common shares and common share purchase warrants (“Cenovus Warrants”) are listed on the Toronto Stock Exchange (“TSX”) and New York Stock Exchange. Our cumulative redeemable preferred shares series 1, 2, 3, 5 and 7 are listed on the TSX. We are the second largest Canadian-based crude oil and natural gas producer, with upstream operations in Canada and the Asia Pacific region, and the second largest Canadian-based refiner and upgrader, with downstream operations in Canada and the United States (“U.S.”). On January 1, 2021, Cenovus and Husky Energy Inc. (“Husky”) closed a transaction to combine the two companies through a plan of arrangement (the“Arrangement”).

Our upstream operations include oil sands projects in northern Alberta, thermal and conventional crude oil, natural gas and natural gas liquids (“NGLs”) projects across Western Canada, crude oil production offshore Newfoundland and Labrador and natural gas and NGLs production offshore China and Indonesia. Our downstream operations include upgrading and refining operations in Canada and the U.S., and retail operations across Canada.

Our operations involve activities across the full value chain to develop, produce, transport and market crude oil and natural gas in Canada and internationally. Our physically integrated upstream and downstream operations help us mitigate the impact of volatility in light-heavy crude oil differentials and contribute to our net earnings by capturing value from crude oil and natural gas production through to the sale of finished products such as transportation fuels.

During the three months ended March 31, 2022, crude oil production from our Oil Sands assets averaged 595.0 thousand barrels per day and total upstream production averaged 798.6 thousand barrels of oil equivalent (“BOE”) per day. Downstream crude oil throughput was 501.8 thousand barrels per day. Refer to the Operating and Financial Results section of this MD&A for a summary of production by product type.

Our Strategy

Our strategy is focused on delivering value over the long-term through sustainable, low-cost, diversified and integrated energy leadership. We aim to maximize shareholder value through competitive cost structures and optimizing margins, while delivering top-tier safety performance and Environment, Social and Governance (“ESG”) leadership. The Company prioritizes Free Funds Flow generation that enables debt reduction, shareholder returns through a combination of base dividend growth and flexible return mechanisms, reinvestment in the business and diversification.

On December 8, 2021, we announced our 2022 budget focused on our operational strength, capital discipline and ESG leadership. Free Funds Flow generation will be used to grow shareholder returns and further reduce debt. Our 2022 guidance, as updated on April 26, 2022, is available on our website at cenovus.com. For more details see the Operating and Financial Results section of this MD&A.

Updates to our Shareholder Return and Capital Allocation Frameworks

Maintaining a strong balance sheet with the resilience to withstand price volatility and capitalize on opportunities throughout the commodity cycle is a key element of Cenovus’s capital allocation framework. We have further defined our capital allocation framework to ensure we continue to strengthen our balance sheet, enable flexibility in both high and low commodity price environments and improve our shareholder value proposition.

We have set an ultimate Net Debt Target(1) of $4 billion, which will serve as a floor on Net Debt. When Net Debt is less than $9 billion and above $4 billion, we will target to allocate 50 percent of Excess Free Funds Flow to shareholder returns, while still continuing to deleverage the balance sheet until we reach the Net Debt Target of $4 billion. When Net Debt is above $9 billion, we would plan to allocate all Excess Free Funds Flow to deleveraging the balance sheet. When Net Debt is at the $4 billion floor, we will target to return 100 percent of Excess Free Funds Flow to shareholders through share buybacks and/or variable dividends.

Excess Free Funds Flow is defined as Free Funds Flow:

•Minus base dividends paid on common shares in the quarter.

•Minus dividends paid on preferred shares in the quarter.

•Minus other uses of cash, including decommissioning liabilities and principal repayment of leases, in the quarter.

•Minus any acquisition costs from acquisition activities closing in the quarter.

•Plus any proceeds from divestiture activities closing in the quarter.

The Company’s capital allocation framework will enable a shift to paying out a higher percentage of Excess Free Funds Flow to shareholders, with lower leverage and a lower risk profile. Our $4 billion Net Debt Target represents a Net Debt to Adjusted Funds Flow Ratio Target(1) of approximately 1.0 times at the bottom of the cycle.

(1) Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	2

Based on the capital allocation framework described above, we plan to return incremental capital to shareholders beyond the base dividend as follows:

•When quarter-end Net Debt is less than $9 billion, we will target to deliver to shareholders 50 percent of that quarter’s Excess Free Funds Flow, in the form of share buybacks and/or variable dividends.

•When quarter-end Net Debt is at the $4 billion floor, we will target to deliver to shareholders 100 percent of that quarter’s Excess Free Funds Flow in the form of share buybacks and/or variable dividends.

Share buybacks will be our preferred mechanism, and will continue to be executed opportunistically, driven by return thresholds. Where the value of share buybacks in a quarter is less than the targeted value of returns, the remainder will be delivered through variable dividends paid in the following quarter. Where the value of share buybacks in a quarter is greater than the targeted value of returns, no variable dividend will be paid for that quarter.

Aligned with this, we have increased the annual base dividend to $0.42 per share and have plans to sustainably grow the base dividend over time.

Key Priorities for 2022

We aim to deliver on our strategy through five key strategic objectives:

Top Tier Safety Performance and ESG Leadership

Underpinning everything we do is the safety of our people and communities, and the integrity of our assets. We’ve identified safety and asset integrity, and corporate governance as foundational to our business, providing the backbone for all our operations. We will continue to promote a safety culture in all aspects of our work and use a variety of programs to always keep safety top of mind.

A path and program for achieving our targets representing our five ESG focus areas has been established, including identifying the levers and resources that will be required. Additional information on management’s efforts and performance across ESG topics, including our ESG targets and plans to achieve them, are available in Cenovus’s 2020 ESG report at cenovus.com.

Competitive Cost Structures and Optimizing Margins

We continue to target additional cost savings and margin enhancements through further physical integration of upstream assets with downstream assets, which is expected to shorten the value chain and reduce condensate costs associated with heavy oil transportation. We continue to look for ways to improve efficiencies across Cenovus to drive incremental capital, operating and general and administrative cost reductions.

Maintaining and Further Reducing Debt Levels

As at March 31, 2022, our long-term debt was $11.7 billion and our Net Debt(1) position was $8.4 billion. Our Net Debt to Adjusted EBITDA Ratio(1) was 0.8 times at March 31, 2022. Our Net Debt to Adjusted Funds Flow Ratio(1) was 1.0 times at March 31, 2022. Maintaining a strong balance sheet provides financial flexibility to manage the business through commodity price volatility.

Returns-focused Capital Allocation

The Company's capital program and increased base dividend are sustainable at US$45 WTI per barrel, and provide opportunities to sustainably grow shareholder returns. On April 26, 2022, our second quarter dividend tripled. The Company’s Board of Directors declared a second quarter dividend of $0.105 per common share, payable on June 30, 2022, for common shareholders of record as at June 15, 2022.

In 2022, we anticipate our total capital expenditures to be between $2.9 billion and $3.3 billion, including $500 million to $550 million (excluding insurance proceeds) for the Superior Refinery rebuild. We will continue to be disciplined with our capital.

Growing Free Funds Flow Through Pricing Cycles

Our top-tier assets and low cost structure position us to grow Free Funds Flow through pricing cycles. Cenovus's diversified asset and product mix generates predictable and stable Free Funds Flow, and reduces risk and cash flow volatility by leveraging pipelines, logistics and marketing to optimize the value chain. We are able to generate strong margins with modest capital investment.

(1) Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	3

Cenovus has a track record of operational reliability. We expect our annual upstream production to average between 760 thousand BOE per day and 800 thousand BOE per day and total downstream crude throughput to average between 530 thousand barrels per day to 580 thousand barrels per day in 2022. We continue to monitor the overall market dynamics to assess how we manage our upstream production levels. Our assets can respond to market signals and ramp production up or down accordingly. Our decisions around production levels and refinery crude run rates will be focused on maximizing the value we receive for our products.

Our Operations

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 (jointly owned with BP Canada Energy Group ULC (“BP Canada”) and operated by Cenovus), as well as the 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 NGLs and natural gas within the Elmworth-Wapiti, Kaybob‑Edson, Clearwater and Rainbow Lake operating areas in Alberta and British Columbia and 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, which provides flexibility for market access to optimize product mix, delivery points, transportation commitments and customer diversification.

•Offshore, includes offshore operations, exploration and development activities in China and the east coast of Canada, as well as the equity-accounted investment in the Husky-CNOOC Madura Ltd. (“HCML”) joint venture in Indonesia.

Downstream Segments

•Canadian Manufacturing, includes the owned and operated Lloydminster upgrading and asphalt refining complex which upgrades heavy oil and bitumen into synthetic crude oil, diesel fuel, asphalt and other ancillary products. Cenovus seeks to maximize the value per barrel from its heavy oil and bitumen production through its integrated network of assets. In addition, Cenovus owns and operates the Bruderheim crude-by-rail terminal and two ethanol plants. Cenovus also markets its production and third-party commodity trading volumes of synthetic crude oil, asphalt and ancillary products.

•U.S. Manufacturing, includes the refining of crude oil to produce gasoline, diesel, jet fuel, asphalt and other products at the wholly-owned Lima Refinery and Superior Refinery, the jointly-owned Wood River and Borger refineries (jointly owned with operator Phillips 66) and the jointly-owned Toledo Refinery (jointly owned with operator BP Products North America Inc. (“BP”)). Cenovus also markets some of its own and third-party volumes of refined petroleum products including gasoline, diesel and jet fuel.

•Retail, includes the sale of Cenovus's own and third-party volumes of refined petroleum products, including gasoline and diesel, through retail, commercial and bulk petroleum outlets, as well as wholesale channels in Canada.

Corporate and Eliminations

Corporate and Eliminations primarily 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 internal usage of natural gas production between segments, transloading services provided to the Oil Sands segment by the Company’s crude-by-rail terminal, crude oil production used as feedstock by the Canadian Manufacturing and U.S. Manufacturing segments, and diesel production in the Canadian Manufacturing segment sold to the Retail segment. Eliminations are recorded based on current market prices.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	4
QUARTERLY RESULTS OVERVIEW
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During the first quarter of 2022, commodity prices reached the highest levels since 2014. Strong operational performance of our integrated asset base, combined with our continued focus on health and safety and competitive cost structures, drove solid financial results. Our total upstream production was nearly 800 thousand BOE per day and Adjusted Funds Flow increased 33 percent compared with the fourth quarter of 2021. We reduced our Net Debt from December 31, 2021 by $1.2 billion, paid our common share dividend and continued purchasing shares through our normal course issuer bid (“NCIB”). In addition, we closed previously announced asset dispositions resulting in net proceeds of approximately $950 million.

Summary of Quarterly Results

	2022	2021				2020
($ millions, except where indicated)	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Production Volumes (1) (MBOE/d)	798.6	825.3	804.8	765.9	769.3	467.2	471.8	465.4	482.6
Crude Throughput (2) (Mbbls/d)	501.8	469.9	554.1	539.0	469.1	169.0	191.1	162.3	221.1
Revenues (3)	16,198	13,726	12,701	10,637	9,293	3,543	3,737	2,311	3,952
Operating Margin (4)	3,464	2,600	2,710	2,184	1,879	625	594	291	(589)
Cash From (Used in) Operating Activities	1,365	2,184	2,138	1,369	228	250	732	(834)	125
Adjusted Funds Flow (4)	2,583	1,948	2,342	1,817	1,141	333	407	(469)	(154)
Capital Investment	746	835	647	534	547	242	148	147	304
Free Funds Flow (4)	1,837	1,113	1,695	1,283	594	91	259	(616)	(458)
Net Earnings (Loss) (5)	1,625	(408)	551	224	220	(153)	(194)	(235)	(1,797)
Per Share - basic ($)	0.81	(0.21)	0.27	0.11	0.10	(0.12)	(0.16)	(0.19)	(1.46)
Per Share - diluted ($)	0.79	(0.21)	0.27	0.11	0.10	(0.12)	(0.16)	(0.19)	(1.46)
Total Assets	55,655	54,104	54,594	53,384	53,378	32,770	32,857	33,919	33,396
Total Long-Term Liabilities (4)	21,889	23,191	22,929	22,972	24,266	13,704	13,889	14,448	13,327
Long-Term Debt, Including Current Portion (6)	11,744	12,385	12,986	13,380	13,947	7,441	7,797	8,085	6,979
Net Debt (7)	8,407	9,591	11,024	12,390	13,340	7,184	7,530	8,232	7,421
Cash Dividends
Common Shares	69	70	35	36	35	—	—	—	77
Per Common Share ($)	0.0350	0.0350	0.0175	0.0175	—	—	—	—	0.0625
Preferred Shares	9	8	9	8	9	—	—	—	—

(1)Refer to the Operating and Financial Results section of this MD&A for a summary of total upstream production by product type.

(2)Represents Cenovus’s net interest in refining operations.

(3)Prior period results were revised for a change in presentation of product swaps and certain third-party purchases used in blending and optimization activities. See the Consolidated Financial Statements and Note 3 of the interim Consolidated Financial Statements for further details.

(4)Non-GAAP financial measure or contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

(5)Net earnings (loss) for all periods in the table above is the same as net earnings (loss) from continuing operations.

(6)Includes current portion of long-term debt of $nil as at March 31, 2022, $545 million as at September 30, 2021 and $632 million as at June 30, 2021 (December 31, 2021, March 31, 2021, December 31, 2020, September 30, 2020, June 30, 2020 and March 31, 2020 – $nil).

(7)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	5

Operationally, many items under Management’s control performed very well:

•We delivered safe operations.

•Upstream production averaged 798.6 thousand BOE per day in the first quarter, an increase of 29.3 thousand BOE per day compared with the first quarter of 2021. See the Operating and Financial Results section of this MD&A for a summary of upstream production by product type.

•We achieved record high single-day natural gas production in China.

Despite operational challenges in our U.S. Manufacturing segment, downstream crude throughput averaged 501.8 thousand barrels per day in the first quarter, an increase of 32.7 thousand barrels per day compared with the first quarter of 2021.

We generated revenue of $16.2 billion and cash from operating activities of $1.4 billion. Adjusted Funds Flow was $2.6 billion and capital investment was $746 million, resulting in Free Funds Flow of $1.8 billion. Operating Margin was $3.5 billion in the first quarter of 2022 compared with $1.9 billion in the first quarter of 2021, primarily due to increased revenue from higher average realized crude oil, NGLs and natural gas sales prices, higher market crack spreads and higher sales volumes.

We continued to strengthen our balance sheet:

•On February 9, 2022, we completed additional deleveraging by purchasing the remaining US$384 million in principal of outstanding notes due in 2023 and 2024.

•Our long-term debt decreased by $641 million as a result of the purchase discussed above, combined with the appreciation of the Canadian dollar in relation to the US dollar.

•Our Net Debt decreased by $1.2 billion as compared to December 31, 2021.

We closed previously announced asset sales:

•On January 31, 2022, we sold our Tucker asset in the Oil Sands segment for net proceeds of $730 million.

•On February 28, 2022, we sold our Wembley assets in the Conventional segment for net proceeds of $220 million.

In the first quarter of 2022, we incurred $26 million of Total Integration Costs(1) (2021 – $245 million), of the $100 million to $150 million expected as integration work continues throughout the year.

We demonstrated our commitment to returning cash to shareholders:

•On April 26, 2022, our Board of Directors declared a second quarter dividend of $0.105 per common share, payable on June 30, 2022 to common shareholders of record as at June 15, 2022. This is an increase of $0.07 per common share compared with our dividends declared and paid in the first quarter of 2022.

•On April 27, 2022, we announced a revised framework to return incremental cash to shareholders through continued share repurchases and/or the use of a variable dividend mechanism.

•In November 2021, we commenced a NCIB for the purchase of up to 146.5 million of the Company’s common shares until November 8, 2022. In the first quarter of 2022, Cenovus purchased and cancelled 25 million common shares for $466 million. From April 1, 2022 to April 26, 2022, Cenovus purchased an additional 16 million common shares for $354 million. Cenovus has purchased 58 million common shares for $1.1 billion since the commencement of the NCIB to April 26, 2022.

•We paid our dividend of $0.035 per common share for the first quarter.

(1) Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	6
OPERATING AND FINANCIAL RESULTS
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Selected Operating Results — Upstream

	Three Months Ended March 31,
		Percent Change
	2022		2021
Upstream Production Volumes by Segment (1) (MBOE/d)
Oil Sands	597.0	7		555.6
Conventional	125.2	(8)		135.9
Offshore	76.4	(2)		77.8
Total Production Volumes	798.6	4		769.3
Upstream Production Volumes by Product
Bitumen (Mbbls/d)	578.8	9		532.9
Heavy Crude Oil (Mbbls/d)	16.2	(21)		20.5
Light Crude Oil (Mbbls/d)	21.9	(14)		25.6
NGLs (Mbbls/d)	37.6	(9)		41.1
Conventional Natural Gas (MMcf/d)	865.3	(3)		894.9
Total Production Volumes (MBOE/d)	798.6	4		769.3
Total Upstream Sales Volumes (2) (MBOE/d)	724.5	6		685.9
Netback (3) ($/BOE)	58.74	87		31.36

(1)Refer to the Oil Sands, Conventional or Offshore Operating Results section of this MD&A for a summary of production by product type.

(2)Total upstream sales volumes exclude natural gas volumes used for internal consumption by the Oil Sands segment of 527 MMcf per day for the three months ended March 31, 2022 (519 MMcf per day for the three months ended March 31, 2021).

(3)Contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

In the first quarter, our upstream assets performed well. Total production increased 29.3 thousand barrels per day compared with 2021, primarily due to new wells coming online in the second half of 2021 at Foster Creek and Christina Lake. The increase was partially offset by the dispositions of the Tucker asset on January 31, 2022 and the Wembley asset on February 28, 2022, as well as divestitures of other assets in the Conventional segment in the second half of 2021.

Selected Operating Results — Downstream

	Three Months Ended March 31,
		Percent Change
	2022		2021
Downstream Manufacturing Crude Throughput (Mbbls/d)
Canadian Manufacturing	98.1	(8)		106.2
U.S. Manufacturing	403.7	11		362.9
Total Throughput	501.8	7		469.1
Retail (1) (millions of litres/d)
Fuel sales, including wholesale	6.6	2		6.5

(1)On November 30, 2021, Cenovus announced agreements to sell 337 gas stations within our retail fuels network for total cash proceeds of $420 million before closing adjustments. The sales are expected to close in mid-2022. We are retaining our commercial fuels business, which includes 167 cardlock, bulkplant and travel centre locations.

In the Canadian Manufacturing segment, crude throughput decreased 8.1 thousand barrels per day. At the Lloydminster Upgrader, we had temporary unplanned maintenance outages during the quarter, and we reduced rates at the end of March as we prepared for planned maintenance, which started in early April, 2022. The Lloydminster Refinery ran at or near capacity throughout the first quarter of 2022.

In the U.S. Manufacturing segment, crude throughput increased 40.8 thousand barrels per day compared with 2021, primarily due to improved market conditions, partially offset by unplanned outages and planned turnarounds in the first quarter of 2022 having a greater negative impact on crude throughput than those in the first quarter of 2021.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	7

In March, we commenced turnarounds at the Wood River and Borger refineries. Early in the quarter, we operated the Lima and Wood River refineries at reduced rates to optimize margins when market crack spreads were low. At the Lima Refinery, we encountered an unplanned equipment outage after completing a turnaround in the fourth quarter of 2021 that was resolved towards the end of January, as well as other temporary unplanned outages during the quarter. In addition, we had temporary unplanned outages at the Toledo Refinery during the quarter.

Selected Consolidated Financial Results

Operating Margin

Operating Margin is a non-GAAP financial measure and is used to provide a consistent measure of the cash generating performance of our assets for comparability of our underlying financial performance between periods.

	Three Months Ended March 31,
($ millions)	2022	2021
Gross Sales (1)	19,144	10,815
Less: Royalties	1,185	373
Revenues	17,959	10,442
Expenses
Purchased Product (1)	9,035	5,210
Transportation and Blending	2,925	1,800
Operating Expenses	1,554	1,302
Realized (Gain) Loss on Risk Management Activities	981	251
Operating Margin (2)	3,464	1,879

(1) Prior period results were revised for a change in presentation of product swaps and certain third-party purchases used in blending and optimization activities. See the Consolidated Financial Statements and Note 3 of the interim Consolidated Financial Statements for further details.

(2)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Operating Margin by Segment

Three Months Ended March 31, 2022

Operating Margin increased in 2022, primarily due to:

•Higher average crude oil, NGLs and natural gas sales prices resulting from higher benchmark pricing.

•Increased upstream and refined products sales volumes.

•Higher refining margins from our downstream business.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	8

These increases in Operating Margin were partially offset by:

•Increased blending costs due to higher condensate prices and volumes.

•Increased royalties and fuel costs, both impacted by significantly higher benchmark pricing.

•Higher realized risk management losses on the settlement of benchmark prices relative to our risk management contract prices.

•Planned and unplanned outages in our downstream operations.

•Increased Renewable Identification Numbers (“RINs”) costs impacting our U.S. Manufacturing segment.

Cash From (Used in) Operating Activities and Adjusted Funds Flow

	Three Months Ended March 31,
($ millions)	2022	2021
Cash From (Used in) Operating Activities	1,365	228
(Add) Deduct:
Settlement of Decommissioning Liabilities	(19)	(11)
Net Change in Non-Cash Working Capital	(1,199)	(902)
Adjusted Funds Flow (1)	2,583	1,141

(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cash From Operating Activities and Adjusted Funds Flow were higher in 2022 due to increased Operating Margin, as discussed above. In addition, we incurred integration costs of $24 million, compared with $223 million in 2021. The increases were partially offset by the quarterly settlement of the contingent payment of $160 million.

The change in non-cash working capital in 2022 was primarily due to an increase in inventories and accounts receivable, partially offset by an increase in accounts payable on March 31, 2022, compared with December 31, 2021 primarily due to higher crude oil and refined product pricing. In March 2022, WTI averaged US$108.26 per barrel, compared with the December 2021 average of US$71.69 per barrel. Chicago regular unleaded gasoline (“RUL”) averaged US$129.92 per barrel in March 2022, compared with US$83.78 per barrel in December 2021.

Net Earnings (Loss)

( millions)
Net Earnings (Loss) for the Three Months Ended March 31, 2021
Increase (Decrease) due to:
Operating Margin
Corporate and Eliminations:
Re-measurement of Contingent Payment
Integration Costs
General and Administrative
Finance Costs
Gain (loss) on divestiture of assets
Other income (loss), net
Other (1)
Unrealized Risk Management Gain (Loss) (2)
Depreciation, Depletion and Amortization
Exploration Expense
Income Tax Recovery (Expense)
Net Earnings (Loss) for the Three Months Ended March 31, 2022

All values are in US Dollars.

(1)Includes interest income, realized foreign exchange (gains) losses, share of income (loss) from equity-accounted affiliates, and Corporate and Eliminations revenues, purchased product, transportation and blending, operating expenses and (gain) loss on risk management.

(2)On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI. For the three months ended March 31, 2022, the unrealized risk management loss related to the WTI contracts impacted by this announcement was $370 million.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	9

Net earnings in 2022 improved compared with 2021 due to:

•Increased Operating Margin, as discussed above.

•Gains on divestiture of assets of $242 million in 2022, primarily related to the Tucker and Wembley dispositions.

•Higher other income due to insurance proceeds related to the Superior Refinery and a 2018 incident in the Atlantic region.

•Integration costs of $24 million, compared with $223 million in 2021.

The increase was partially offset by:

•Unrealized risk management losses of $293 million, compared with gains of $132 million in 2021.

•Higher income tax expense.

•A loss on re-measurement of contingent payment of $236 million (2021 – $187 million).

Net Debt

As at ($ millions)	March 31,<br>2022	December 31,<br>2021
Short-Term Borrowings	62	79
Current Portion of Long-Term Debt	—	—
Long-Term Debt	11,744	12,385
Total Debt (1)	11,806	12,464
Less: Cash and Cash Equivalents	(3,399)	(2,873)
Net Debt (2)	8,407	9,591

(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

(2)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

In the first quarter of 2022, long-term debt decreased by $641 million and Net Debt decreased by $1.2 billion. The reduction in long-term debt was due to the purchase of the remaining US$384 million in principal of outstanding notes due in 2023 and 2024, combined with the appreciation of the Canadian dollar in relation to the US dollar.

Capital Investment (1)

	Three Months Ended March 31,
($ millions)	2022	2021
Upstream
Oil Sands	375	218
Conventional	88	66
Offshore	53	26
	516	310
Downstream
Canadian Manufacturing	14	4
U.S. Manufacturing	207	205
Retail	1	1
	222	210
Corporate and Eliminations	8	27
Capital Investment	746	547

(1)Includes expenditures on PP&E and E&E assets.

Oil Sands capital investment in the first quarter of 2022 was primarily focused on sustaining activities at Christina Lake, Foster Creek and the Lloydminster thermal assets, and the drilling of stratigraphic test wells as part of our integrated winter program.

Conventional capital investment focused on sustaining drilling, completion and tie-in programs.

Offshore capital investment in 2021 was primarily for the Terra Nova asset life extension (“ALE”) project and preservation capital for the West White Rose project in the Atlantic region. Major construction on the West White Rose project was suspended in March of 2020 and the project remains under review while we evaluate options with our partners.

U.S. Manufacturing capital investment focused primarily on the Superior Refinery rebuild, combined with refining reliability and maintenance at the Wood River, Borger and Toledo refineries.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	10

Drilling Activity

		Stratigraphic Test Wells<br><br>and Observation Wells
	Three Month Ended March 31,
(net wells, unless otherwise stated)		2022	2021		2022	2021
Foster Creek		52		17	5		—
Christina Lake (2)		—		25	8		8
Sunrise		15		—	2		—
Lloydminster Thermal		1		—	19		13
Tucker		6		—	—		—
Lloydminster Conventional Heavy Oil		—		—	—		2
Other (3)		16		15	—		—
		90		57	34		23

(1)Steam-assisted gravity drainage (“SAGD”) well pairs in the Oil Sands segment are counted as a single producing well.

(2)Includes Narrows Lake.

(3)Includes new resource plays.

Stratigraphic test wells were drilled to help identify well pad locations for sustaining wells and to further progress the evaluation of other assets. Observation wells were drilled to gather information and monitor reservoir conditions.

	Three Months Ended<br><br>March 31, 2022			Three Months Ended<br><br>March 31, 2021
(net wells, unless otherwise stated)	Drilled	Completed	Tied-in	Drilled	Completed	Tied-in
Conventional	13	20	20	9	8	9

In the Offshore segment, we drilled and completed two (0.8 net) planned development wells in Indonesia in the first quarter of 2022 (2021 — no wells drilled, completed or tied-in).

Future Capital Investment

Future Capital Investment is a specified financial measure. See the Specified Financial Measures Advisory of this MD&A. Our 2022 guidance as updated on April 26, 2022, is available on our website at cenovus.com.

Our updated guidance reflects:

•Increased capital investment for the Superior Refinery rebuild project.

•Decreased Oil Sands production to reflect closing the sale of the Tucker asset on January 31, 2022.

•Increased unit operating expenses largely due to higher natural gas prices.

The following table shows guidance for 2022:

	Future Capital Investment<br><br>($ millions)	Production<br><br>(MBOE/d)	Throughput<br><br>(Mbbls/d)
Upstream
Oil Sands	1,350 - 1,550	552 - 609
Conventional	150 - 200	118 - 134
Offshore	200 - 250	64 - 76
Downstream (1)	1,150 - 1,250		530 - 580
Corporate and Eliminations	50 - 70

(1)Future Capital Investment includes between $500 million and $550 million for the Superior Refinery rebuild project.

In 2022, we plan to focus our Future Capital Investment on:

•Sustaining production in the Oil Sands segment.

•Sustaining drilling programs in the Conventional segment.

•The Superior Refinery rebuild project.

•The Terra Nova ALE project and preservation capital for the West White Rose project in the Offshore segment.

•Refining operations and reliability in our downstream segments and a debottlenecking project at the Lloydminster Refinery to increase throughput capacity.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	11

Further information on the changes in our financial and operating results can be found in the Reportable Segments section of this MD&A. Information on our risk management activities can be found in the Risk Management and Risk Factors section of this MD&A and in the notes to the interim Consolidated Financial Statements.

COMMODITY PRICES UNDERLYING OUR FINANCIAL RESULTS

Key performance drivers for our financial results include commodity prices, quality and location price differentials, refining crack spreads as well as the U.S./Canadian dollar and Chinese Yuan (“RMB”)/Canadian dollar exchange rates. The following table shows selected market benchmark prices and average exchange rates to assist in understanding our financial results.

Selected Benchmark Prices and Exchange Rates (1)

(Average US$/bbl, unless otherwise indicated)	Q1 2022	Percent Change		Q4 2021
Dated Brent	101.41	67	60.90	79.73
WTI	94.29	63	57.84	77.19
Differential Brent-WTI	7.12	133	3.06	2.54
WCS at Hardisty	79.76	76	45.37	62.55
Differential WTI-WCS	14.53	17	12.47	14.64
WCS (C$/bbl)	101.01	76	57.44	78.71
WCS at Nederland	89.19	59	55.93	71.62
Differential WTI-WCS at Nederland	5.10	167	1.91	5.57
Condensate (C5 @ Edmonton)	96.09	66	58.04	79.13
Differential WTI-Condensate (Premium)/Discount	(1.80)	(800)	(0.20)	(1.94)
Differential WCS-Condensate (Premium)/Discount	(16.33)	(29)	(12.67)	(16.58)
Average (C$/bbl)	121.69	66	73.49	99.64
Synthetic @ Edmonton	93.05	71	54.32	75.40
WTI-Synthetic (Premium)/Discount Differential	1.24	(65)	3.52	1.79
Refined Product Prices
Chicago Regular Unleaded Gasoline (“RUL”)	109.16	57	69.51	91.84
Chicago Ultra-low Sulphur Diesel (“ULSD”)	119.60	63	73.28	96.53
Refining Benchmarks
Chicago 3-2-1 Crack Spread (2)	18.35	42	12.93	16.06
Group 3 3-2-1 Crack Spread (2)	19.94	27	15.67	15.82
RINs	6.44	17	5.49	6.11
Natural Gas Prices
AECO (C$/Mcf)	4.59	57	2.92	4.94
NYMEX (US$/Mcf)	4.95	84	2.69	5.83
Foreign Exchange Rate
US$ per C$1 - Average	0.790	—	0.790	0.794
US$ per C$1 - End of Period	0.800	1	0.795	0.789
RMB per C$1 - Average	5.014	(2)	5.120	5.073

(1)These benchmark prices are not our realized sales prices and represent approximate values. For our average realized sales prices and realized risk management results, refer to the Netback tables in the Reportable Segments section of this MD&A.

(2)The average 3-2-1 crack spread is an indicator of the refining margin and is valued on a last in, first out accounting basis.

Crude Oil and Condensate Benchmarks

In the first quarter of 2022, Brent and WTI crude oil benchmarks increased significantly compared with both the first and fourth quarters of 2021, generally due to very tight global supply and demand balance. Benchmarks were volatile during the quarter, with WTI ranging from a low of approximately US$76 per barrel and reaching a high of US$124 per barrel following the Russian invasion of Ukraine. The market’s reaction is driven primarily by concern about a potential material disruption in Russian exports related to sanctions, which exacerbated previous tight global supply and demand balance, low crude oil spare capacity and other unplanned global supply outages in the first quarter. Further, the Organization of Petroleum Exporting Countries (“OPEC”) and a group of 10 non-OPEC members (collectively, “OPEC+”) continue to only gradually increase production quotas that began in the second quarter of 2021.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	12

The price received for our Atlantic crude oil and Asia Pacific NGLs is primarily driven by the price of Brent. WTI is an important benchmark for Canadian crude oil since it reflects inland North American crude oil prices and the Canadian dollar equivalent is the basis for determining royalty rates for a number of our crude oil properties. In the first quarter of 2022, the Brent-WTI differential widened compared with 2021 due to higher fuel costs and supply disruptions as a result of the Russian invasion of Ukraine.

WCS is blended heavy oil which consists of both conventional heavy oil and unconventional diluted bitumen. In the first three months of 2022, the average WTI-WCS differential remained narrow compared to the fourth quarter of 2021 and widened slightly compared to the first quarter of 2021. Startup of the Enbridge Line 3 Replacement in the fourth quarter of 2021 provided incremental takeaway capacity from the Western Canadian Sedimentary Basin (“WCSB”). Unplanned outages in the WCSB and low storage levels also benefitted the WCS differential in the first quarter of 2022.

WCS at Nederland is a heavy oil benchmark at the U.S. Gulf Coast (“USGC”) which is representative of pricing for our sales in the USGC. WCS at Nederland prices were strong in the first quarter of 2022 compared to 2021 consistent with increasing crude oil prices globally, as refiners increased crude runs to adjust to increased demand for products. The WTI-WCS at Nederland differential widened in the first quarter of 2022 compared with the first quarter of 2021, mainly attributed to high coking utilization in the USGC, planned and unplanned refinery maintenance, and the gradual return of some OPEC+ medium and heavy oil barrels into the market.

We upgrade heavy crude oil and bitumen into a sweet synthetic crude oil, the Husky Synthetic Blend (“HSB”), at the Lloydminster Upgrader. The price realized for HSB is primarily driven by the price of WTI and by the supply and demand of sweet synthetic crude oil from Western Canada, which influences the WTI-Synthetic differential.

Blending condensate with bitumen enables our production to be transported through pipelines. Our blending ratios, calculated as diluent volumes as a percentage of total blended volumes, range from approximately 25 percent to 35 percent. The WCS-Condensate differential is an important benchmark as a wider differential generally results in a decrease in the recovery of condensate costs when selling a barrel of blended crude oil. When the supply of condensate in Alberta does not meet the demand, Edmonton condensate prices may be driven by USGC condensate prices plus the cost to transport the condensate to Edmonton. Our blending costs are also impacted by the timing of purchases and deliveries of condensate into inventory to be available for use in blending as well as timing of sales of blended product.

Average Edmonton condensate benchmark prices were at a slight premium relative to WTI in the first quarter of 2022. The differential remained narrow as a result of continued high oil sands production leading to increased blending requirements.

Refining Benchmarks

RUL and ULSD benchmark prices are representative of inland refined product prices and are used to derive the Chicago 3-2-1 market crack spread. The 3-2-1 market crack spread is an indicator of the refining margin generated by converting three barrels of crude oil into two barrels of regular unleaded gasoline and one barrel of ultra-low sulphur diesel using current month WTI- based crude oil feedstock prices and valued on a last in, first out accounting basis.

The Chicago 3-2-1 market crack spread reflects the market for our Toledo, Lima and Wood River refineries. The Group 3, 3-2-1 market crack spread, reflects the market for our Borger Refinery.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	13

Average Chicago refined product prices increased in the first quarter of 2022 compared with both the fourth and first quarters of 2021. The strength in crack spreads and refined product prices is driven by a tight distillate market and healthy gasoline and jet fuel demand as restrictions are lifted. Russian sanctions came at a time when the market is already strained because of refinery rationalization. In March 2022, Chicago 3-2-1 market crack spreads averaged almost US$27 per barrel, compared with the quarterly average of US$18.35 per barrel. Global distillate stocks are at critically low levels and reduced clean product supplies from Russia prompted crack spreads to spike in the near term. RINs remain high as a result of a tight biofuel market, rising feedstock prices and uncertainty around policies that drive RINs demand.

As North American refining crack spreads are expressed on a WTI basis, while refined products are generally set by global prices, the strength of refining market crack spreads in the U.S. Midwest and Midcontinent will reflect the differential between Brent and WTI benchmark prices.

Our realized crack spreads are affected by many other factors such as the variety of crude oil feedstock; refinery configuration and product output; the time lag between the purchase and delivery of crude oil feedstock; and the cost of feedstock, which is valued on a first in, first out (“FIFO”) accounting basis.

(1) There are no forward prices for RINs.

Natural Gas Benchmarks

Average NYMEX natural gas prices increased significantly in the first quarter of 2022, compared to the first quarter of 2021, due to a rebound in U.S. domestic demand and record high liquified natural gas exports, coupled with a muted supply response and strong global pricing. Average AECO prices improved alongside the NYMEX benchmark. The differential between AECO and NYMEX widened compared with the first quarter of 2021 due to increased supply in Western Canada. The price received for our Asia Pacific natural gas production is largely based on long-term contracts.

Foreign Exchange Benchmarks

A substantial amount of our revenues are subject to foreign exchange exposure as the sales prices of our crude oil, NGLs, natural gas and refined products are determined by reference to U.S. benchmark prices. An increase in the value of the Canadian dollar compared with the U.S. dollar has a negative impact on our reported revenue. In addition to our revenues being denominated in U.S. dollars, a significant portion of our long-term debt is also U.S. dollar denominated. As the Canadian dollar weakens, our U.S. dollar debt gives rise to unrealized foreign exchange losses when translated to Canadian dollars. In addition, changes in foreign exchange rates impact the translation of U.S. and Asia Pacific operations.

In the first quarter of 2022, the Canadian dollar on average was flat relative to the U.S. dollar compared with 2021, resulting in minimal impact on our revenues quarter-over-quarter. The Canadian dollar strengthened relative to the U.S. dollar as at March 31, 2022 compared with December 31, 2021, resulting in unrealized foreign exchange gains on the translation of U.S. dollar debt.

A portion of our long-term sales contracts in Asia Pacific are priced in RMB. An increase in the value of the Canadian dollar relative to the RMB will decrease the revenues received in Canadian dollars from the sale of natural gas commodities in the region. In the first quarter of 2022, the Canadian dollar on average was relatively flat compared with RMB, resulting in minimal impact on our revenues quarter-over-quarter.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	14
COMMODITY PRICE OUTLOOK
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Energy markets remain volatile, starting the year quite strong and significantly improved compared with 2021. Successful global COVID-19 vaccine rollouts, loosening of restrictions and solid economic growth have resulted in demand growth for crude oil and refined products, while generally the supply response has lagged due to a combination of producer discipline, OPEC+ policy and unplanned outages. The market is pricing in potential disruption in Russian supply which could result in continued demand surplus and will necessitate rebalancing of trade flows.

The market faces a highly uncertain future as the Russia-Ukraine conflict develops. We expect the general outlook for crude oil and refined product prices will be volatile and impacted by the duration and severity of the conflict, the extent to which Russian exports are reduced by sanctions, the timing and ability of producers and governments to replace reduced supply, and OPEC+ policy. Potential incremental COVID-19 outbreaks and variants remain a risk to the pace of demand growth.

In addition to the above, our commodity pricing outlook for the next 12 months is influenced by the following:

•We expect that the WTI-WCS differential in Alberta will remain largely tied to the extent supply stays within export capacity, the completion of the Trans Mountain Expansion project and the level of crude-by-rail activity. Upcoming planned oil sands maintenance in the WCSB is expected to keep supply within export capacity into the summer months of 2022.

•The ability and willingness of OPEC and OPEC+ to greatly increase production remains uncertain.

•Crack spreads will remain volatile as Russia is a significant exporter of refined products. Sanctions will reduce supply and result in redirection of global trade flows. Economic effects of the conflict could impact demand. Refining market crack spreads are likely to continue to fluctuate, adjusting for seasonal trends and refinery utilization in North America.

•We expect both Henry Hub and AECO prices to remain strong. Current fundamentals suggest a tight market will persist, but this could be offset by increased associated gas production as well as fuel switching amid high prices. Prices will continue to be impacted by weather.

•We expect the Canadian dollar to continue to be impacted by crude oil prices, the pace at which the U.S. Federal Reserve Board and the Bank of Canada raise or lower benchmark lending rates relative to each other and emerging macro-economic factors.

Our upstream crude oil production and most of our downstream refined products are exposed to movements in the WTI crude oil price. Natural gas and NGLs production associated with our Conventional assets provide improved upstream integration for the fuel, solvent and blending requirements at our Oil Sands operations.

Our refining capacity is focused in the U.S. Midwest along with smaller exposures in the USGC and Alberta, exposing Cenovus to the market crack spread in all of these markets. We will continue to monitor market fundamentals and optimize run rates at our refineries accordingly.

Our WTI exposure to crude differentials includes light-heavy and light-medium price differentials. Light-medium price differential exposure is focused on light-medium crudes in the U.S. Midwest market region where we have refining capacity, and to a lesser degree in the USGC and Alberta. Our exposure to light-heavy crude oil price differentials is composed of a global light-heavy component, a regional component in markets we transport barrels to, as well as the Alberta differentials, which are subject to transportation constraints. While we expect to see volatility in crude oil prices, we have the ability to partially mitigate the impact of crude oil and refined product prices and differentials through the following:

•Transportation commitments and arrangements – using our existing firm service commitments for takeaway capacity and supporting transportation projects that move crude oil from our production areas to consuming markets, including tidewater markets.

•Integration – having heavy oil refining capacity capable of processing Canadian heavy oil. From a value perspective, our refining business positions us to capture value from both the WTI-WCS differential for Canadian crude oil as well as from spreads on refined products.

•Dynamic storage – our ability to use the significant storage capacity in our oil sands reservoirs provides us flexibility on timing of production and sales of our inventory. We will continue to manage our production rates in response to pipeline capacity constraints, voluntary and mandated production curtailments and crude oil price differentials.

•Traditional crude oil storage tanks in various geographic locations.

On April 4, 2022, we announced the suspension of our crude oil sales price risk management activities related to WTI. Given the strength of our balance sheet and liquidity position, we determined that these programs are no longer required to support financial resilience. The WTI contracts impacted by this announcement will be closed by June 30, 2022. We intend to continue to use financial instruments to mitigate our exposure to the prices of various commodities, including some WTI for exposure management unrelated to crude oil sales price risk management; and products, including associated price differentials and refining margins. For further details, see Notes 26 and 27 to the interim Consolidated Financial Statements).

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	15
REPORTABLE SEGMENTS
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UPSTREAM

OIL SANDS

In the first quarter of 2022, we:

•Delivered safe and reliable operations.

•Sold our Tucker asset for net proceeds of $730 million on January 31, 2022.

•Produced 595.0 thousand barrels per day, compared with 553.4 thousand barrels per day in the first quarter of 2021.

•Generated Operating Margin of $2.2 billion, an increase of $1.1 billion compared with the first quarter of 2021 primarily due to higher average realized sales prices and higher sales volumes.

•Invested capital of $375 million primarily focused on sustaining activities at Christina Lake, Foster Creek and the Lloydminster thermal assets, and the drilling of stratigraphic test wells as part of our integrated winter program.

•Achieved a Netback of $56.44 per BOE.

Financial Results

	Three Months Ended March 31,
($ millions)	2022	2021
Gross Sales (1)	9,218	4,918
Less: Royalties	1,082	324
Revenues	8,136	4,594
Expenses
Purchased Product (1)	1,483	861
Transportation and Blending	2,885	1,778
Operating	702	585
Realized (Gain) Loss on Risk Management	867	229
Operating Margin	2,199	1,141
Unrealized (Gain) Loss on Risk Management	266	(141)
Depreciation, Depletion and Amortization	635	612
Exploration Expense	1	11
Segment Income (Loss)	1,297	659

Operating Margin Variance

(1)Reported revenues include the value of condensate sold as heavy oil blend. Condensate costs are recorded in transportation and blending expense. The crude oil price excludes the impact of condensate purchases.

(2)Other includes third-party sourced volumes, construction and other activities not attributable to the production of crude oil, NGLs or natural gas.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	16

Operating Results

	Three Months Ended March 31,
	2022	2021
Total Sales Volumes (MBOE/d)	609.9	560.8
Total Realized Price (1) ($/BOE)	95.90	52.86
Crude Oil Production by Asset (Mbbls/d)
Foster Creek	197.9	163.1
Christina Lake	254.1	222.9
Sunrise (2)	24.1	27.8
Lloydminster Thermal	96.3	96.0
Tucker (3)	6.4	23.1
Lloydminster Conventional Heavy Oil	16.2	20.5
Total Daily Crude Oil Production (4) (Mbbls/d)	595.0	553.4
Oil Sands Natural Gas (5) (MMcf/d)	12.8	13.0
Total Daily Production (MBOE/d)	597.0	555.6
Effective Royalty Rate (percent)	22.3	14.4
Transportation and Blending Cost (1) ($/BOE)	7.23	8.06
Operating Cost (1) ($/BOE)	12.51	11.49

(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

(2)Represents Cenovus’s 50 percent interest in Sunrise operations.

(3)Sale of the Tucker asset closed on January 31, 2022.

(4)Oil Sands production is primarily bitumen, except for Lloydminster conventional heavy oil, which is heavy crude oil.

(5)Conventional natural gas product type.

Revenues

Price

In the first quarter of 2022, our realized sales price was $95.90 per BOE compared with $52.86 per BOE in the first quarter of 2021. The increase in realized sales price was primarily due to higher WTI benchmark prices, partially offset by slightly wider WTI-WCS differentials. In the first quarter of 2022, we sold approximately 25 percent (2021 – 20 percent) of our production to U.S. destinations to improve our realized sales price.

In the first quarter of 2022, gross sales included $1,415 million (2021 – $815 million) from third-party sourced volumes which are not included in our realized price or our Netbacks. Refer to “Netback Reconciliations – Oil Sands” in this MD&A for more detail.

In the first quarter of 2022, gross sales included other amounts of $52 million (2021 – $66 million) relating to construction, transportation and blending activities. These amounts are not included in our realized price or our Netbacks. Refer to “Netback Reconciliations – Oil Sands” in this MD&A for more detail.

The heavy oil and bitumen produced by Cenovus must be blended with condensate to reduce its viscosity to transport it to market through pipelines. Our realized bitumen sales price does not include the sale of condensate, however, it is influenced by the price of condensate. As the cost of condensate increases relative to the price of blended crude oil, our realized heavy oil and bitumen sales price decreases. Up to three months may lapse from when we purchase condensate to when we sell our blended production.

Cenovus makes storage and transportation decisions about our marketing and transportation infrastructure, including storage and pipeline assets, to optimize product mix, delivery points, transportation commitments and customer diversification, and to inventory physical positions. In order to price protect our inventories associated with storage or transport decisions, Cenovus employs various price alignment and volatility management strategies, including risk management contracts, to reduce volatility in future cash flows and improve cash flow stability. As announced on April 4, 2022, we have suspended our crude oil sales price risk management activities related to WTI. Given the strength of our balance sheet and liquidity position, we have determined these programs are no longer required to support financial resilience. The WTI contracts impacted by this announcement will be closed by June 30, 2022.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	17

In the first quarter of 2022, we incurred a realized risk management loss due to the settlement of benchmark prices rising above our risk management contract prices, as physical inventory was sold we recognized an offsetting gain due to rising benchmark prices. In the first quarter of 2022, we recorded unrealized losses on our crude oil financial instruments primarily due to forward benchmark pricing rising above our risk management contract prices that related to future periods and the realization of settled positions.

Production Volumes

Oil Sands crude oil production was 595.0 thousand barrels per day in the first quarter of 2022, an increase of 41.6 thousand barrels per day compared with the first quarter of 2021.

Production at Tucker decreased 16.7 thousand barrels per day quarter-over-quarter as we closed the sale of the asset on January 31, 2022.

Production at Foster Creek increased 34.8 thousand barrels per day quarter-over-quarter due to new wells coming online during the last six months of 2021, partially offset by natural declines.

Production at Christina Lake increased 31.2 thousand barrels per day quarter-over-quarter due to new wells coming online during the quarter and the last nine months of 2021.

Lloydminster thermal continued its strong performance from 2021. Sunrise production decreased 3.7 thousand barrels per day quarter-over-quarter primarily due to natural declines. This is being mitigated with a redevelopment program with production from the program expected in the second quarter of 2022. Lloydminster conventional heavy oil production decreased marginally quarter-over-quarter as wells were shut-in to meet new emissions regulations in Alberta.

Royalties

Royalty calculations for our Oil Sands segment are based on government prescribed royalty regimes in Alberta and Saskatchewan.

Our Alberta oil sands royalty projects (Foster Creek, Christina Lake, and Sunrise) are based on government prescribed pre- and post-payout royalty rates, which are determined on a sliding scale using the Canadian dollar equivalent WTI benchmark price.

Royalties for a pre-payout project are based on a monthly calculation that applies a royalty rate (ranging from one percent to nine percent, based on the Canadian dollar equivalent WTI benchmark price) to the gross revenues from the project.

Royalties for a post-payout project are based on an annualized calculation which uses the greater of: (1) the gross revenues multiplied by the applicable royalty rate (one percent to nine percent, based on the Canadian dollar equivalent WTI benchmark price); or (2) the net revenues of the project multiplied by the applicable royalty rate (25 percent to 40 percent, based on the Canadian dollar equivalent WTI benchmark price). Gross revenues are a function of sales revenues less diluent costs and transportation costs. Net revenues are a function of sales revenues less diluent costs, transportation costs, and allowed operating and capital costs.

Foster Creek and Christina Lake are post-payout projects and Sunrise is a pre-payout project.

For our Saskatchewan assets, Lloydminster thermal and Lloydminster conventional heavy oil, royalty calculations are based on an annual rate that is applied to each project, as well as each project's Crown and freehold split. For Crown royalties, the pre-payout calculation is based on a one percent rate and the post-payout calculation is based on a 20 percent rate. The freehold calculation is limited to post-payout projects and is based on an eight percent rate.

Effective royalty rates increased primarily due to higher realized pricing and higher Alberta oil sands sliding scale royalty rates.

Royalties increased by $758 million, to $1.1 billion, compared with the first quarter of 2021, mainly due to higher net revenue as a result of higher realized pricing combined with increased production.

Expenses

Transportation and Blending

Blending costs increased $1.1 billion to $2.5 billion quarter-over-quarter. The increase was primarily due to higher condensate benchmark prices (US$96.09 per barrel compared with US$58.04 per barrel in the first quarter of 2021), combined with higher volumes.

Transportation costs decreased $13 million to $397 million in the first quarter of 2022 compared with 2021, primarily due to reduced volumes shipped by rail, partially offset by higher volumes.

Per-unit Transportation Expenses

Transportations costs were $7.23 per BOE in the first quarter of 2022 (2021 – $8.06 per BOE).

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At Foster Creek, transportation costs were $9.90 per barrel compared with $10.98 per barrel in the first quarter of 2021 as we reduced our reliance on shipping to the U.S. via rail while increasing our total volumes delivered to the U.S. via our pipeline capacity. We shipped 40 percent (2021 – 25 percent) of our volumes to U.S. destinations, of which five percent (2021 – 35 percent) were via rail.

At Christina Lake, transportation costs were $6.37 per barrel in the first quarter of 2022 (2021 – $6.65 per barrel) as we shipped less volumes to the USGC.

At Sunrise, per unit transportation costs increased $2.13 per barrel compared with 2021 to $13.15 per barrel as we shipped 70 percent (2021 – 40 percent) of our volumes to U.S. destinations.

At our Lloydminster thermal, Tucker and Lloydminster conventional heavy oil assets, per unit transportation costs decreased $2.82 per barrel compared with 2021 to $3.51 per barrel. We stopped shipping these barrels to US destinations after the first quarter of 2021 as we optimized our pipeline capacity after the Arrangement.

Operating

Primary drivers of our operating expenses in the first quarter of 2022 were fuel, chemical costs, workforce, and repairs and maintenance. Total and per-unit operating costs increased primarily due to higher fuel costs as a result of higher natural gas prices. Per-unit non-fuel costs decreased at Foster Creek and Christina Lake primarily due to higher sales volumes, partially offset by increased chemical costs at Foster Creek. Per-unit non-fuel costs at our other Oil Sands assets increased primarily due to higher chemical costs and workover activity at Sunrise and our Lloydminster thermal assets.


(/BOE) (1)	2022	Percent <br>Change	2021
Foster Creek
Fuel	4.71	30	3.62
Non-Fuel	6.48	(9)	7.11
Total	11.19	4	10.73
Christina Lake
Fuel	4.51	47	3.07
Non-Fuel	4.71	(11)	5.31
Total	9.22	10	8.38
Other Oil Sands (2)
Fuel	6.85	55	4.41
Non-Fuel	12.93	13	11.45
Total	19.78	25	15.86
Total	12.51	9	11.49

All values are in US Dollars.

(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

(2)Includes Sunrise, Tucker, Lloydminster thermal and Lloydminster conventional heavy oil assets. Sale of the Tucker asset closed on January 31, 2022.

Netbacks


(/BOE)	2022	2021
Sales Price (1)	95.90	52.86
Royalties (1)	19.72	6.41
Transportation (1)	7.23	8.06
Operating Expenses (1)	12.51	11.49
Netback (2)	56.44	26.90

All values are in US Dollars.

(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

(2)Contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

DD&A

In the first quarter of 2022, DD&A increased $23 million compared with 2021 primarily due to increased production. The average depletion rate for the quarter ended March 31, 2022 was $11.80 per BOE (2021 – $11.13 per BOE).

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	19

CONVENTIONAL

In the first quarter of 2022, we:

•Delivered safe and reliable operations.

•Closed the sale of our assets in the Wembley area for net proceeds of $220 million on February 28, 2022.

•Generated Operating Margin of $263 million, an increase of $53 million compared with the first quarter of 2021, primarily due to higher average realized sales prices.

•Invested capital of $88 million focused on sustaining drilling, completion and tie-in programs.

•Achieved a Netback of $22.04 per BOE.

Financial Results

	Three Months Ended March 31,
($ millions)	2022	2021
Gross Sales	1,112		776
Less: Royalties	71		24
Revenues	1,041		752
Expenses
Purchased Product	606		381
Transportation and Blending	34		18
Operating	134		142
Realized (Gain) Loss on Risk Management	4		1
Operating Margin	263		210
Unrealized (Gain) Loss on Risk Management	—		(1)
Depreciation, Depletion and Amortization	80		108
Exploration Expense	—		(4)
Segment Income (Loss)	183		107

Operating Margin Variance

(1)Reflects operating margin from processing facility.

Revenues

In the first quarter of 2022, gross sales included $606 million (2021 – $381 million) relating to third-party sourced volumes, which are not included in our per-unit pricing metrics or our Netbacks.

In the first quarter of 2022, revenues included amounts relating to processing and transportation activities for third parties of $24 million, (2021 – $24 million), which are not included in our per-unit pricing metrics or our Netbacks.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	20

Operating Results

	Three Months Ended March 31,
	2022	2021
Total Sales Volumes (MBOE/d)	125.2	135.9
Total Realized Price (1) ($/BOE)	42.84	30.32
Light Crude Oil ($/bbl)	112.67	61.59
NGLs ($/bbl)	55.39	38.02
Conventional Natural Gas ($/Mcf)	5.55	4.23
Production by Product
Light Crude Oil (Mbbls/d)	8.2	8.7
NGLs (Mbbls/d)	24.5	28.2
Conventional Natural Gas (MMcf/d)	555.0	594.5
Total Daily Production (MBOE/d)	125.2	135.9
Conventional Natural Gas Production (percentage of total)	74	73
Crude Oil and NGLs Production (percentage of total)	26	27
Effective Royalty Rate (percent)	15.9	6.9
Transportation Costs (1) ($/BOE)	3.18	1.43
Operating Costs (1) ($/BOE)	11.33	11.09
Per Unit DD&A (1) ($/BOE)	8.16	8.64

(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Revenues

Price

Our total realized sales price increased quarter-over-quarter primarily due to higher crude oil and natural gas benchmark prices.

Production Volumes

Production volumes decreased 10.7 thousand BOE per day quarter-over-quarter primarily due asset sales in the second half of 2021. The production decrease is partially offset by 20 new net wells brought on production during the quarter.

Royalties

The Conventional assets are subject to royalty regimes in Alberta and British Columbia. Total royalties and effective royalty rates increased quarter-over-quarter primarily due to higher realized pricing and lower gas cost allowance credits.

Expenses

Transportation

Our transportation costs reflect charges for the movement of crude oil, NGLs and natural gas from the point of production to where the product is sold. Transportation costs increased by $16 million in 2022 compared with 2021. Per-unit transportation costs averaged $3.18 per BOE in the first quarter of 2022 (2021 – $1.43 per BOE).

Operating

Primary drivers of our operating expenses in the first quarter of 2022 were repairs and maintenance, workforce, and property tax and lease costs. Per-unit operating costs increased marginally quarter-over-quarter. Total operating costs decreased compared with the first quarter of 2021 due to lower sales volumes.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	21

Netbacks


(/BOE)	2022	2021
Sales Price (1)	42.84		30.32
Royalties (1)	6.29		2.00
Transportation and Blending (1)	3.18		1.43
Operating Expenses (1)	11.33		11.09
Netback (2)	22.04		15.80

All values are in US Dollars.

(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

(2)Contains a Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

DD&A

The average depletion rate for the first three months of 2022 was $8.16 per BOE (2021 – $8.64 per BOE).

In the first quarter of 2022, total Conventional DD&A was $80 million (2021 – $108 million). The decrease was due to asset dispositions in the first quarter of 2022 and the second half of 2021.

OFFSHORE

In the first quarter of 2022, we:

•Delivered safe and reliable operations.

•Generated Operating Margin of $458 million, an increase of $114 million compared with the first quarter of 2021, primarily due to higher average realized sales prices.

•Earned a Netback of $69.57 per BOE.

•Achieved record high single-day natural gas production in China.

•Invested capital of $53 million primarily for the Terra Nova ALE project and preservation capital for the West White Rose project in the Atlantic region.

In the Atlantic region, the West White Rose project remains deferred while we continue to evaluate options with our partners. The decision whether to restart the West White Rose project is expected to be made by mid-2022. The Terra Nova ALE project remains underway in Spain for the dry dock portion of the project. Production is expected to resume before the end of 2022.

In Indonesia, we drilled and completed two planned development wells in the MBH field. In April, we commenced drilling the first of five planned development wells in the MDA field. The MBH and MDA fields are expected to start producing later this year. At the MAC field, production facilities are under construction and three development wells are expected to be drilled later this year.

In China, we relinquished Block 23/07. The 23/07 block was in the exploration phase, and never produced or had drilling activity.

Financial Results

	Three Months Ended March 31,
	2022							2021
($ millions)	Asia Pacific		Atlantic		Offshore		Asia Pacific		Atlantic		Offshore
Revenues
Gross Sales		395		172		567		321		110		431
Less: Royalties		22		10		32		17		8		25
		373		162		535		304		102		406
Expenses
Transportation and Blending		—		4		4		—		4		4
Operating		27		46		73		22		36		58
Operating Margin (1)		346		112		458		282		62		344
Depreciation, Depletion and Amortization						150						125
Exploration Expense						15						(1)
Share of (Income) Loss from Equity-Accounted Affiliates						(4)						(12)
Segment Income (Loss)						297						232

(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	22

Operating Margin Variance

Operating Results

	Three Months Ended March 31,
	2022	2021
Total Sales Volumes (MBOE/d)	77.3	75.7
Atlantic	14.6	14.9
Asia Pacific (1)	62.7	60.8
Total Realized Price (2) ($/BOE)	90.44	70.70
Atlantic - Light Crude Oil ($/bbl)	130.87	81.37
Asia Pacific (1) ($/BOE)	81.04	68.08
NGLs ($/bbl)	110.30	69.66
Conventional Natural Gas ($/Mcf)	12.22	11.28
Production by Product
Atlantic - Light Crude Oil (Mbbls/d)	13.7	16.9
Asia Pacific (1)
NGLs (Mbbls/d)	13.1	12.9
Conventional Natural Gas (MMcf/d)	297.5	287.4
Asia Pacific Total (MBOE/d)	62.7	60.8
Total Daily Production (MBOE/d)	76.4	77.8
Effective Royalty Rate (percent)
Atlantic	6.1	7.0
Asia Pacific (1)	10.8	6.5
Operating Expense (2) ($/BOE)	11.63	9.37
Atlantic	36.06	26.56
Asia Pacific (1)	5.95	5.14
Per Unit DD&A (2) ($/BOE)	29.86	25.87

(1)Reported sales volumes, associated per unit values and royalty rates reflect Cenovus’s 40 percent interest in the Madura-BD gas project. Revenues and expenses related to the HCML joint venture are accounted for using the equity method for consolidated financial statement purposes.

(2)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Revenues

Price

The price we receive for natural gas in Asia is set under long-term contracts. Our realized sales price on light crude oil and NGLs increased quarter-over-quarter primarily due to higher Brent benchmark pricing.

Production and Sales Volumes

Asia Pacific production increased marginally compared with the first quarter of 2021, primarily due to higher demand in China, partially offset by a planned floating production, storage and offloading unit (“FPSO”) shutdown in Indonesia.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	23

Atlantic production decreased slightly compared with the first quarter of 2021 due to natural declines. Light oil from production at the White Rose field is offloaded from the SeaRose FPSO to tankers and stored at an onshore terminal before shipment to buyers. The result is a timing difference between production and sales.

Royalties

Royalty rates in China and Indonesia are governed by production sharing contracts in which production is shared with the Chinese and Indonesian governments. The effective royalty rate for the first quarter of 2022 was 10.8 percent (2021 – 6.5 percent), as development costs at the Madura-BD gas project were recovered by the third quarter of 2021 and no longer deducted from the royalty calculation.

Royalties at the White Rose field are based on an agreement between our working interest partners and the Government of Newfoundland and Labrador. We currently pay a basic royalty of 7.5 percent of gross sales from the White Rose field and 5.0 percent of gross sales at the satellite extensions. The effective royalty rate in the first quarter of 2022 was 6.1 percent (2021 – 7.0 percent).

Expenses

Operating

Primary drivers of our Asia Pacific operating expenses in the first quarter of 2022 were workforce, repairs and maintenance, and insurance. Total and per-unit operating expenses were relatively flat compared with the first quarter of 2021.

Primary drivers of our Atlantic operating expenses in the first quarter of 2022 were repairs and maintenance, workforce, vessel costs and helicopter costs. Total and per-unit operating expenses increased quarter-over-quarter primarily due to a higher working interest in Terra Nova and lower production.

Transportation

Transportation in the Atlantic region includes the cost of transporting crude oil from the SeaRose floating production, storage and offloading unit to onshore via tankers, as well as storage costs.

Netbacks

	Three Months Ended <br>March 31, 2022
($/BOE, except where indicated)	China	Indonesia (1)		Atlantic (/bbl)	Total Offshore
Sales Price (2)	82.09		74.82			90.44
Royalties (2)	4.43		34.23			8.58
Transportation and Blending (2)	—		—			0.66
Operating Expenses (2)	4.66		13.51			11.63
Netback (3)	73.00		27.08			69.57

All values are in US Dollars.

	Three Months Ended <br>March 31, 2021
($/BOE, except where indicated)	China	Indonesia (1)		Atlantic (/bbl)	Total Offshore
Sales Price (2)	69.44		60.68			70.70
Royalties (2)	3.70		8.26			4.67
Transportation and Blending (2)	—		—			0.56
Operating Expenses (2)	4.71		7.51			9.37
Netback (3)	61.03		44.91			56.10

All values are in US Dollars.

(1) Reported sales volumes, associated per unit values and royalty rates reflect Cenovus’s 40 percent interest in the Madura-BD gas project. Revenues and expenses related to the HCML joint venture are accounted for using the equity method for consolidated financial statement purposes.

(2) Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

(3) Contains a Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

DD&A

In the first quarter of 2022, total Offshore DD&A was $150 million (2021 – $125 million). The increase was due to a higher DD&A rate and higher production. The average depletion rate in the first quarter of 2022 was $29.86 per BOE (2021 – $25.87 per BOE).

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	24

DOWNSTREAM

CANADIAN MANUFACTURING

In the first quarter of 2022, we:

•Averaged combined crude utilization of 89 percent at the Lloydminster Upgrader and Lloydminster Refinery.

•Incurred a temporary unplanned maintenance outage at the Lloydminster Upgrader, negatively impacting throughput.

•Slowed crude run rates at the Lloydminster Upgrader toward the end of March in preparation for planned maintenance that started in April.

•Generated Operating Margin of $114 million, an increase of $32 million compared with the first quarter of 2021 due to a higher upgrading differential, partially offset by lower sales volumes.

Financial Results


( millions)	2022	2021
Revenues	1,044		806
Purchased Product	804		631
Gross Margin (1)	240		175
Expenses
Transportation and Blending	2		—
Operating	124		93
Operating Margin	114		82
Depreciation, Depletion and Amortization	42		43
Segment Income (Loss)	72		39

All values are in US Dollars.

(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Operating Results


	2022	2021
Crude Oil Throughput Capacity (Mbbls/d)	110.5	110.5
Lloydminster Upgrader (Mbbls/d)	81.5	81.5
Lloydminster Refinery (Mbbls/d)	29.0	29.0
Crude Oil Throughput (Mbbls/d)	98.1	106.2
Lloydminster Upgrader (Mbbls/d)	70.7	78.4
Lloydminster Refinery (Mbbls/d)	27.4	27.8
Crude Utilization (1) (percent)	89	96
Refined Products Output (Mbbls/d)	99.4	107.4
Upgrading Differential (2)	20.50	14.01
Refining Margin (3) (/bbl)	22.20	15.54
Lloydminster Upgrader (/bbl)	24.37	16.64
Lloydminster Refinery (/bbl)	16.61	12.43
Unit Operating Expense (4) (/bbl)	10.99	7.22
Crude-by-Rail Operations
Volumes Loaded (5) (Mbbls/d)	3.0	21.6
Ethanol Production (thousands of litres/d)	773.4	396.5

All values are in US Dollars.

(1)Based on crude throughput volumes and results of operations at the Lloydminster Upgrader and Refinery.

(2)Based on benchmark price differential between heavy oil feedstock and synthetic crude.

(3)Contains a Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

(4)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A. Operating costs divided by crude oil throughput.

(5)Volumes transported outside of Alberta, Canada.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	25

Crude oil throughput decreased 8.1 thousand barrels per day quarter-over-quarter to 98.1 thousand barrels per day in the first quarter of 2022 due to temporary unplanned maintenance outages at the Lloydminster Upgrader. In addition, we slowed crude run rates at the Lloydminster Upgrader towards the end of March to prepare for planned maintenance that began in early April.

At the Lloydminster Refinery, crude oil throughput remained steady quarter-over-quarter. We are scheduled to begin a planned turnaround in the second quarter of 2022.

We expect the impact of planned outages on crude throughput to be between approximately 20 thousand barrels per day to 30 thousand barrels per day in the second quarter of 2022.

Revenues and Gross Margin

Upgrading operations process blended heavy crude oil and bitumen into high value synthetic crude oil and low sulphur distillates. Revenues are dependent on the sales price of synthetic crude oil and diesel. Upgrading gross margin is primarily dependent on the differential between the sales price of synthetic crude oil and diesel, and the cost of heavy crude oil feedstock.

Lloydminster Refinery operations process blended heavy crude oil into asphalt and industrial products. Revenues are dependent on market prices for asphalt and other industrial products. The gross margin is primarily dependent on asphalt and industrial products pricing and the cost of heavy crude oil feedstock. Sales from the Lloydminster Refinery increase during paving season, which typically runs from May through October each year.

The Lloydminster Upgrader has the option to source crude oil feedstock from our Lloydminster thermal production. The Lloydminster Refinery sources crude oil feedstock from our Lloydminster thermal and Lloydminster conventional heavy oil production.

Revenues increased $238 million quarter-over-quarter to $1.0 billion in the first quarter of 2022 primarily due to higher synthetic crude benchmark prices and higher asphalt and industrial products prices. The increase was partially offset by lower sales volumes from the Lloydminster Upgrader.

Gross margin increased $65 million quarter-over-quarter to $240 million in the first quarter of 2022 primarily due to a higher upgrading differential, and higher asphalt and industrial product margins. The increase was partially offset by lower sales volumes from the Lloydminster Upgrader.

Revenues and gross margin at our Bruderheim crude-by-rail terminal decreased compared with the first quarter of 2021 due to minimal third-party volumes and Cenovus’s reduced reliance on rail.

See the Specified Financial Measures Advisory of this MD&A for revenues and gross margin by asset.

Operating Expense

Primary drivers of operating expenses in the first quarter of 2022, were workforce, repairs and maintenance, and energy costs. Total and per-unit operating costs increased as we prepared for planned maintenance at the Lloydminster Upgrader and a turnaround at the Lloydminster Refinery, and higher energy and workforce costs. In addition, per-unit operating costs increased due to lower crude throughput volumes.

DD&A

For the quarter ended March 31, 2022, Canadian Manufacturing DD&A was $42 million (2021 – $43 million).

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	26

U.S. MANUFACTURING

In the first quarter of 2022, we:

•Generated Operating Margin of $423 million, an increase of $332 million compared with 2021 primarily due to higher market crack spreads, feedstock cost advantage and increased sales volumes.

•Achieved crude utilization of 80 percent and crude throughput of 403.7 thousand barrels per day.

•Commenced turnarounds at the Wood River and Borger refineries in March.

•Incurred temporary unplanned outages at the Toledo Refinery, negatively impacting throughput.

•Incurred a temporary unplanned equipment outage at the Lima Refinery subsequent to completing a turnaround in the fourth quarter of 2022. The outage was resolved towards the end of January, and we incurred other unplanned temporary outages during the quarter.

•Invested capital of $207 million focused primarily on the Superior Refinery rebuild, combined with refining reliability and maintenance at the Wood River, Borger and Toledo refineries.

Financial Results


( millions)	2022	2021
Revenues	6,509	3,437
Purchased Product	5,482	2,920
Gross Margin (1)	1,027	517
Expenses
Operating	494	405
Realized (Gain) Loss on Risk Management	110	21
Operating Margin	423	91
Unrealized (Gain) Loss on Risk Management	27	10
Depreciation, Depletion and Amortization	85	114
Segment Income (Loss)	311	(33)

All values are in US Dollars.

(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Select Operating Results

	Three Months Ended March 31,
	2022	2021
Crude Oil Throughput Capacity (Mbbls/d)	502.5		502.5
Lima Refinery	175.0		175.0
Toledo Refinery (1)	80.0		80.0
Wood River and Borger Refineries (1)	247.5		247.5
Crude Oil Throughput (Mbbls/d)	403.7		362.9
Lima Refinery	136.1		124.7
Toledo Refinery (1)	72.1		68.1
Wood River and Borger Refineries (1)	195.5		170.1
Throughput by Product (Mbbls/d)
Heavy Crude Oil	153.8		119.6
Light and Medium Crude Oil	249.9		243.3
Crude Utilization (percent)	80		72
Refining Margin (2)(3) ($/bbl)	28.26		15.84
Unit Operating Expense (3)(4) ($/bbl)	13.59		12.40

(1) Represents Cenovus’s 50 percent interest in Wood River, Borger and Toledo refinery operations.

(2) Contains a Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

(3) Based on crude oil throughput volumes and operating results at Wood River, Borger, Lima, Toledo and Superior refineries.

(4) Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	27

Crude oil throughput increased 40.8 thousand barrels per day quarter-over-quarter to 403.7 thousand barrels per day in the first quarter of 2022. The increase was primarily due to improved market conditions compared with the first quarter of 2021, partially offset by unplanned outages and planned turnarounds in the first quarter of 2022 having a greater impact on crude throughput than those in the first quarter of 2021.

At the Lima Refinery, we had a temporary unplanned equipment outage subsequent to completing a turnaround in the fourth quarter of 2021, which was resolved by the end of January 2022. Further equipment outages impacted throughput for the remainder of the quarter. We also operated at reduced rates early in the quarter due to low market crack spreads and ramped up production in March as market crack spreads significantly improved.

At the Toledo Refinery, throughput was optimized in line with market demand, and was impacted by temporary unplanned outages. We began a planned turnaround in the second quarter of 2022.

The Wood River and Borger refineries commenced planned turnarounds in March 2022. At the Wood River Refinery, we operated at reduced rates early in the quarter to optimize margins as market conditions dictated. The Borger Refinery performed well during the quarter.

We expect the impact of planned outages on crude throughput to be approximately 60 thousand barrels per day to 70 thousand barrels per day in the second quarter of 2022.

Revenues and Gross Margin

While market crack spreads are an indicator of margin from processing crude oil into refined products, the refining realized crack spread, which is the gross margin on a per-barrel basis, is affected by many factors. These factors include the type of crude oil feedstock processed, refinery configuration and the proportion of gasoline, distillate and secondary product output, the time lag between the purchase of crude oil feedstock and the processing of that crude oil through the refineries, and the cost of feedstock. Processing less expensive crude relative to WTI creates a feedstock cost advantage. Our feedstock costs are valued on a FIFO accounting basis.

Revenues increased $3.1 billion quarter-over-quarter due to higher sales volumes and higher refined product pricing benchmarks.

In the first quarter of 2022, gross margin increased $510 million compared with 2021 driven by improved market crack spreads and higher crude advantage, combined with increased throughput and sales volumes, partially offset by higher RINs costs.

In the first quarter of 2022, RINs costs were $233 million (2021 – $180 million) with the increase due to higher RINs pricing and volume obligations. RINs prices were US$6.44 per barrel in the quarter ended March 31, 2022 (2021 – US$5.49 per barrel).

Operating Expenses

Primary drivers of operating expenses for the quarter ended March 31, 2022, were workforce costs, repairs, maintenance, services and energy costs.

In the first quarter of 2022, per-unit operating expenses increased $1.19 per barrel of crude throughput to $13.59 per barrel of crude throughput. The increase was primarily due to higher workforce costs, increased repairs and maintenance related to the turnaround at the Wood River Refinery, preparation for the turnaround at the Toledo Refinery and higher maintenance costs at the Superior Refinery. The increase was partially offset by lower utility pricing at the Borger Refinery compared with 2021 when winter storm Uri drove utility prices higher.

Operating expenses increased $89 million quarter-over-quarter to $494 million, primarily due to higher crude throughput and the factors discussed above.

DD&A

U.S. Manufacturing DD&A was $85 million in the first quarter of 2022 (2021 – $114 million). The decrease is the result of impairment charges of $1.9 billion in the fourth quarter of 2021 in the Lima, Wood River and Borger cash-generating units reducing the amounts available to deplete.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	28

RETAIL

As of March 31, 2022, there were 515 independently operated Husky and Esso-branded petroleum product outlets.

On November 30, 2021, Cenovus announced agreements to sell 337 gas stations within our retail fuels network for total cash proceeds of $420 million before closing adjustments. The sales are expected to close in mid-2022. We are retaining our commercial fuels business, which includes 167 cardlock, bulkplant and travel centre locations.

Financial Results

	Three Months Ended March 31,
($ millions)	2022	2021
Gross Sales	694	447
Purchased Product	660	417
Gross Margin (1)	34	30
Expenses
Operating	27	19
Operating Margin	7	11
Depreciation, Depletion and Amortization	8	12
Segment Income (Loss)	(1)	(1)

(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.

Operating margin associated with the retail assets held for sale for the three months ended March 31, 2022, was $16 million (March 31, 2021 – $14 million).

Select Operating Results

	Three Months Ended March 31,
	2022	2021
Fuel Sales Volume, including wholesale
Fuel Sales (millions of litres/d)	6.6	6.5
Fuel Sales per Retail Outlet (thousands of litres/d)	12.8	12.0

Gross Margin

Gross margin is primarily driven by gasoline and diesel prices and retail pricing for motor fuels.

Operating expenses

Primary drivers of our operating expenses for the quarter ended March 31, 2022, were repairs and maintenance, property tax, workforce and utilities.

DD&A

For the quarter ended March 31, 2022, Retail DD&A was $8 million (2021 – $12 million).

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	29

CORPORATE AND ELIMINATIONS

In the first quarter of 2022, our corporate risk management activities resulted in:

•Unrealized risk management losses of $18 million (2021 – gains of $16 million) related to power and foreign exchange risk management contracts.

•Realized risk management gains of $7 million (2021 – losses of $91 million). The losses in 2021 were primarily due to the realization of WTI put and call option contracts acquired as part of the Arrangement.

Expenses


( millions)	2022	2021
General and Administrative	199		163
Finance Costs	229		244
Interest Income	(15)		(4)
Integration Costs	24		223
Foreign Exchange (Gain) Loss, Net	(102)		(117)
Re-measurement of Contingent Payment	236		187
(Gain) Loss on Divestiture of Assets	(242)		(12)
Other (Income) Loss, Net	(370)		(72)
	(41)		612

All values are in US Dollars.

General and Administrative

Primary drivers of our general and administrative expenses were workforce costs, employee long-term incentive costs and information technology costs. For the quarter ended March 31, 2022, general and administrative expenses increased compared with 2021 primarily due to higher long-term incentive costs as a result of share price increases. Our closing common share price increased from $15.51 on December 31, 2021 to $20.84 on March 31, 2022.

Finance Costs

In the quarter ended March 31, 2022, finance costs decreased by $15 million compared with 2021 primarily due to lower average long-term debt quarter-over-quarter.

The weighted average interest rate of outstanding debt for the quarter ended March 31, 2022, was 4.7 percent (2021 – 4.5 percent).

Integration Costs

For the quarter ended March 31, 2022, we incurred $24 million of costs as a result of the Arrangement, not including capital expenditures (2021 – $223 million). Integration costs decreased quarter-over-quarter as we expect to have spent the majority of these costs in 2021, the year following the Arrangement.

Foreign Exchange


( millions)	2022	2021
Unrealized Foreign Exchange (Gain) Loss	(139)		(139)
Realized Foreign Exchange (Gain) Loss	37		22
	(102)		(117)

All values are in US Dollars.

In the first quarter of 2022, unrealized foreign exchange gains of $139 million were mainly as a result of the translation of our U.S. dollar denominated debt. Realized foreign exchange losses of $37 million were recorded primarily due to the recognition of a $26 million loss on the purchase of U.S. dollar denominated debt.

Re-measurement of Contingent Payment

Cenovus agreed to make quarterly payments to ConocoPhillips Company and certain of its subsidiaries (“ConocoPhillips”) subsequent to the closing date of the acquisition from ConocoPhillips of its 50 percent interest in the FCCL Partnership related to Foster Creek and Christina Lake production. The quarterly payment is $6 million for each dollar that the WCS price exceeds $52 per barrel. The agreement ends on May 17, 2022.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	30

The contingent payment is accounted for as a financial option. The fair value of $178 million as at March 31, 2022, was estimated by calculating the present value of the future expected cash flows using an option pricing model. The contingent payment is re-measured at fair value at each reporting date with changes in fair value recognized in net earnings. For the quarter ended March 31, 2022, non-cash re-measurement losses of $236 million were recorded. As at March 31, 2022, $294 million is payable under this agreement.

As of March 31, 2022, average WCS forward pricing for the remaining term of the contingent payment is approximately $109.19 per barrel.

Other (Income) Loss, Net

For the quarter ended March 31, 2022, other income increased by $298 million. The increase is primarily due to:

•Rebuild insurance proceeds of $269 million related to the Superior Refinery in the first quarter of 2022, compared with business interruption proceeds of $45 million in 2021.

•Insurance proceeds of $52 million related to a 2018 incident in the Atlantic region (2021 – $nil).

•Other income of $22 million related to an increase in the value of our Headwater Exploration Inc. shares (2021 – $nil).

(Gain) Loss on Divestiture of Assets

For the quarter ended March 31, 2022, we recognized a gain on divestiture of assets of $242 million (2021 – $12 million), primarily due to the closing of the sales of our Tucker and Wembley assets.

DD&A

DD&A for the quarter ended March 31, 2022, was $30 million (2021 – $31 million).

Income Tax


( millions)	2022	2021
Current Tax
Canada	367		12
United States	20		—
Asia Pacific	38		34
Other International	—		1
Current Tax Expense (Recovery)	425		47
Deferred Tax Expense (Recovery)	118		27
Total Tax Expense (Recovery)	543		74

All values are in US Dollars.

Tax interpretations, regulations and legislation in the various jurisdictions in which Cenovus and its subsidiaries operate are subject to change. We believe that our provision for income taxes is adequate. There are usually a number of tax matters under review and with consideration of the current economic environment, income taxes are subject to measurement uncertainty. The timing of the recognition of income and deductions for the purpose of current tax expense is determined by relevant tax legislation.

For the three months ended March 31, 2022, the Company recorded a current tax expense related to taxable income arising in Canada, the U.S. and Asia Pacific. The increase is due to higher earnings compared to the first quarter of 2021.

Our effective tax rate is a function of the relationship between total tax expense (recovery) and the amount of earnings (loss) before income taxes. The effective tax rate differs from the statutory tax rate as it reflects different tax rates in other jurisdictions, non-taxable foreign exchange (gains) losses, adjustments for changes in tax rates and other tax legislation, adjustments to the tax basis of the refining assets, variations in the estimate of reserves, differences between the provision and the actual amounts subsequently reported on the tax returns, and other permanent differences.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	31
LIQUIDITY AND CAPITAL RESOURCES
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We have further defined our capital allocation framework to ensure we continue to strengthen our balance sheet, enable flexibility in both high and low commodity price environments, and improve our shareholder value proposition. The Company’s capital allocation framework will enable a shift to paying out a higher percentage of Excess Free Funds Flow to shareholders with lower leverage and a lower risk profile. Our long-term Net Debt to Adjusted Funds Flow Target reflects approximately 1.0 times at the bottom of the cycle. With this revised framework, the Company would have the flexibility in a depressed commodity price environment to manage our balance sheet up to a Net Debt level of $9 billion, or approximately 2.0 times Net Debt to Adjusted Funds Flow at US$45 WTI, and capitalize on opportunities that deliver stronger, risk-adjusted returns for shareholders.

We expect to fund our near-term cash requirements through cash from operating activities and prudent use of our balance sheet capacity including draws on our committed credit facilities and our uncommitted demand facilities and other corporate and financial opportunities that may be available to us. We remain committed to maintaining our investment grade credit ratings at S&P Global Ratings, Moody’s Investor Service, DBRS Limited and Fitch Ratings. The cost and availability of borrowing and access to sources of liquidity and capital is dependent on current credit ratings and market conditions.


( millions)	2022	2021
Cash From (Used In)
Operating Activities	1,365		228
Investing Activities	337		204
Net Cash Provided (Used) Before Financing Activities	1,702		432
Financing Activities	(1,093)		39
Foreign Exchange Gain (Loss) on Cash and Cash Equivalents Held in Foreign Currency	(83)		24
Increase (Decrease) in Cash and Cash Equivalents	526		495
( millions)	March 31,<br>2022	December 31,<br>2021
Cash and Cash Equivalents	3,399		2,873
Total Debt	11,806		12,464

All values are in US Dollars.

Cash From (Used in) Operating Activities

For the quarter ended March 31, 2022, cash generated from operating activities increased due to higher operating margin and lower integration costs. The increases were partially offset by the quarterly settlement of the contingent payment and changes in non-cash working capital.

Excluding the current portion of the contingent payment and assets and liabilities held for sale, our adjusted working capital was $5.2 billion at March 31, 2022, compared with $3.8 billion at December 31, 2021. The increase was primarily due to the improved commodity price environment as discussed in the Operating and Financial Results section of this MD&A. Working capital increased due to increased accounts receivable and inventories, partially offset by increased accounts payable.

We anticipate that we will continue to meet our payment obligations as they come due.

Cash From (Used in) Investing Activities

Cash from investing activities was higher in the first quarter of 2022 compared with 2021 primarily due to proceeds from divestitures and changes in non-cash working capital. The increase was partially offset by higher capital spending and cash acquired in the Arrangement in 2021.

Cash From (Used in) Financing Activities

During the first quarter, we paid US$402 million to purchase a portion of our unsecured notes with principal amounts of US$384 million. In addition, we repaid $16 million in short-term borrowings.

For the quarter ended March 31, 2022, the Company purchased 25 million common shares through the NCIB which allows the Company to purchase up to 146.5 million common shares until November 8, 2022. The shares were purchased at an average price of $18.91 per common share for a total of $466 million. The common shares were subsequently cancelled.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	32

Adjusted Funds Flow and Free Funds Flow

Adjusted Funds Flow is a non-GAAP financial measure commonly used in the oil and gas industry to assist in measuring a company’s ability to finance its capital programs and meet its financial obligations and is the starting point for calculating Free Funds Flow. Free Funds Flow is a non-GAAP financial measure used to assist in measuring the available funds the Company has after financing its capital programs.


( millions)	2022	2021
Cash From (Used in) Operating Activities	1,365	228
(Add) Deduct:
Settlement of Decommissioning Liabilities	(19)	(11)
Net Change in Non-Cash Working Capital	(1,199)	(902)
Adjusted Funds Flow	2,583	1,141
Total Capital Investment	746	547
Free Funds Flow	1,837	594
Cash Dividends	78	44
	1,759	550

All values are in US Dollars. Long-Term Debt and Total Debt

Total Debt as at March 31, 2022 was $11.8 billion (December 31, 2021 – $12.5 billion), which includes $11.7 billion of long-term debt (December 31, 2021 – $12.4 billion). The decrease in Total Debt was primarily due to the purchase of US$384 million of our unsecured notes during the quarter.

As at March 31, 2022, we were in compliance with all of the terms of our debt agreements.

Available Sources of Liquidity

The following sources of liquidity are available as at March 31, 2022:

($ millions)	Maturity	Amount Available
Cash and Cash Equivalents	N/A	3,399
Committed Credit Facility (1)
Revolving Credit Facility – Tranche A	August 18, 2025	4,000
Revolving Credit Facility – Tranche B	August 18, 2024	2,000
Uncommitted Demand Facilities
Cenovus Energy Inc. (2)	N/A	1,007
WRB Refining LP (3)	N/A	219
Sunrise Oil Sands Partnership (4)	N/A	5

(1)No amounts were drawn on the committed credit facility on March 31, 2022.

(2)Our uncommitted demand facilities includes $1,425 million, which may be drawn for general purposes or $1,875 million can be available to issue letters of credit. As of March 31, 2022, there were outstanding letters of credit aggregating to $543 million (December 31, 2021 – $565 million).

(3)Represents Cenovus's 50 percent share of US$450 million (our proportionate share – US$225 million) available to cover short-term working capital requirements. As at March 31, 2022, US$100 million was drawn on these facilities, of which US$50 million was our proportionate share.

(4)Represents Cenovus's 50 percent share. Available for general purposes. There were no amounts drawn on this demand facility as at March 31, 2022.

Under the terms of our committed credit facility, we are required to maintain a debt to capitalization ratio, as defined in the debt agreements, not to exceed 65 percent. We are well below this limit.

U.S. Dollar Denominated Unsecured Notes and Canadian Dollar Unsecured Notes

At March 31, 2022, the total outstanding principal amount of U.S. dollar denominated unsecured notes was US$7.0 billion and the total outstanding principal amount of Canadian dollar denominated unsecured notes was $2.8 billion.

	Unsecured Notes
		U.S. Dollar Denominated<br><br>(US $ millions)	Canadian Dollar Denominated<br><br>($ millions)
As at December 31, 2021		7,385	2,750
Purchases		(384)	—
As at March 31, 2022		7,001	2,750
Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	33
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On February 9, 2022, we paid US$402 million to purchase a portion of our unsecured notes with principal amounts of US$384 million.

Base Shelf Prospectus

We have a base shelf prospectus that allows us to offer, from time to time, up to US$5.0 billion, or the equivalent in other currencies, of debt securities, common shares, preferred shares, subscription receipts, warrants, share purchase contracts and units in Canada, the U.S. and elsewhere, where permitted by law. The base shelf prospectus will expire in November 2023. As at March 31, 2022, $4.7 billion remained available under the base shelf prospectus for permitted offerings (December 31, 2021 – $4.7 billion).

Financial Metrics

We monitor our capital structure and financing requirements using, among other things, specified financial measures consisting of the Net Debt to Capitalization Ratio, Net Debt to Adjusted Funds Flow Ratio and Net Debt to Adjusted EBITDA Ratio. Net Debt to Adjusted Funds Flow is a new metric as at March 31, 2022.

We define Net Debt as short-term borrowings and the current and long-term portions of long-term debt, net of cash and cash equivalents and short-term investments. The components of the ratios include Capitalization, Adjusted Funds Flow and Adjusted EBITDA. We define Capitalization as Net Debt plus Equity. We define Adjusted Funds Flow, as used in the Net Debt to Adjusted Funds Flow Ratio, as cash from (used in) operating activities, less settlement of decommissioning liabilities and net change in operating non-cash working capital calculated on a trailing twelve-month basis. We define Adjusted EBITDA as net earnings before finance costs, interest income, income tax expense (recovery), DD&A, exploration expense, goodwill impairments, unrealized gains (losses) on risk management, foreign exchange gains (losses), revaluation gain, re-measurement of contingent payment, gains (losses) on divestiture of assets, other income (loss), net and share of income (loss) from equity-accounted investees calculated on a trailing twelve-month basis. These ratios are used to steward our overall debt position and as measures of our overall financial strength.

	March 31,2021	December 31, 2021
Net Debt to Capitalization Ratio (1) (percent)	25	29
Net Debt to Adjusted Funds Flow Ratio (1) (times)	1.0	1.3
Net Debt to Adjusted EBITDA Ratio (1) (times)	0.8	1.2

(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.

Our Net Debt to Adjusted EBITDA and our Net Debt to Adjusted Funds Flow Ratio Targets are approximately 1.0 times at the bottom of the commodity price cycle, which we see as approximately US$45 per barrel WTI. This ratio may fluctuate periodically outside the range due to factors such as persistently high or low commodity prices. Our objective is to maintain a high level of capital discipline and manage our capital structure to help ensure we have sufficient liquidity through all stages of the economic cycle. To ensure financial resilience, we may, among other actions, adjust capital and operating spending, draw down on our credit facilities or repay existing debt, adjust dividends paid to shareholders, purchase our common shares for cancellation, issue new debt, or issue new shares.

As at March 31, 2022, our Net Debt to Capitalization Ratio decreased compared with December 31, 2021 primarily due to ongoing reductions in Net Debt, described in the Cash From (Used In) Financing Activities above, and net earnings of $1.6 billion during the quarter ended March 31, 2022.

Our Net Debt to Adjusted Funds Flow Ratio and Net Debt to Adjusted EBITDA Ratio decreased compared with December 31, 2021 as a result of lower Net Debt and higher Operating Margin in the first quarter of 2022. See the Operating and Financial Results section of this MD&A for more information on Net Debt.

Additional information regarding our financial measures and capital structure can be found in the notes to the Consolidated Financial Statements.

Share Capital and Stock-Based Compensation Plans

As at March 31, 2022, there were approximately 1,982 million common shares outstanding (December 31, 2021 – 2,001 million common shares) and 36 million preferred shares outstanding (December 31, 2021 – 36 million preferred shares). Refer to Note 22 of the interim Consolidated Financial Statements for more details.

As at March 31, 2022, there were approximately 64 million common share warrants outstanding (December 31, 2021 – 65 million common share warrants). Each common share warrant entitles the holder to acquire one common share for a period of five years (from date of issue) at an exercise price of $6.54 per common share. The common share warrants expire on December 31, 2025. Refer to Note 22 of the interim Consolidated Financial Statements for more details.

Refer to Note 24 of the interim Consolidated Financial Statements for more details on our stock option plans and our PSU, RSU and DSU Plans.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	34

Our outstanding share data is as follows:

As at April 25, 2022	Units Outstanding<br><br>(thousands)	Units Exercisable<br><br>(thousands)
Common Shares	1,971,975	N/A
Common Share Warrants	63,684	N/A
Series 1 Preferred Shares	10,740	N/A
Series 2 Preferred Shares	1,260	N/A
Series 3 Preferred Shares	10,000	N/A
Series 5 Preferred Shares	8,000	N/A
Series 7 Preferred Shares	6,000	N/A
Stock Options	28,593	18,889
Other Stock-Based Compensation Plans	17,231	1,604

Common Share Dividends

In the first quarter of 2022, we paid dividends of $69 million or $0.0350 per common share (2021 – $35 million or $0.0175 per common share). The declaration of dividends is at the sole discretion of Cenovus's Board and is considered quarterly. The Board declared a second quarter dividend of $0.105 per common share, payable on June 30, 2022 to common shareholders of record as of June 15, 2022.

Cumulative Redeemable Preferred Share Dividends

In the first quarter of 2022, dividends of $9 million, were paid on the series 1, 2, 3, 5 and 7 preferred shares. The declaration of preferred share dividends is at the sole discretion of Cenovus's Board and is considered quarterly. The Board declared a second quarter dividend on the series 1, 2, 3, 5 and 7 preferred shares of $9 million, payable on June 30, 2022 to preferred shareholders of record as of June 15, 2022.

Capital Investment Decisions

Our 2022 capital program is forecast to be between $2.9 billion and $3.3 billion. Our Future Capital Investment is focused on maintaining safe and reliable operations, while positioning the Company to drive enhanced shareholder value to deliver upstream production of approximately 780.0 thousand BOE per day and downstream throughput of approximately 555.0 thousand barrels per day.

Contractual Obligations and Commitments

We have obligations for goods and services entered into in the normal course of business. Commitments are primarily related to transportation agreements and obligations that have original maturities of less than one year are excluded. For further information, see the interim Consolidated Financial Statements.

Our total commitments were $36.3 billion as at March 31, 2022, of which $32.6 billion are for various transportation and storage commitments. Transportation commitments include $9.1 billion that are subject to regulatory approval or have been approved but are not yet in service. Terms are up to 20 years subsequent to the date of commencement and should help align with the Company’s future transportation requirements.

Our commitments with HMLP at March 31, 2022, include $2.6 billion related to transportation, storage and other long-term contracts.

As at March 31, 2022, outstanding letters of credit issued as security for performance under certain contracts totaled $543 million (December 31, 2021 – $565 million).

Legal Proceedings

We are involved in a limited number of legal claims associated with the normal course of operations. We believe that any liabilities that might arise from such matters, to the extent not provided for, are not likely to have a material effect on our Consolidated Financial Statements.

Transactions with Related Parties

Transactions with HMLP are related party transactions as we have a 35 percent ownership interest in HMLP. As the operator of the assets held by HMLP, we provide management services for which we recover shared service costs. We are also the contractor for HMLP and construct its assets on a cost recovery basis with certain restrictions. For the three months ended March 31, 2022, we charged HMLP $48 million for construction and management services (2021 – $32 million).

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	35

We pay an access fee to HMLP for the use of its pipeline systems that are used by our blending business. We also pay HMLP for transportation and storage services. For the three months ended March 31, 2022, we incurred costs of $68 million for the use of HMLP’s pipeline systems, as well as transportation and storage services (2021 – $72 million).

RISK MANAGEMENT AND RISK FACTORS

For a full understanding of the risks that impact us, the following discussion should be read in conjunction with the Risk Management and Risk Factors section of our 2021 annual MD&A.

We are exposed to a number of risks through the pursuit of our strategic objectives. Some of these risks impact the energy industry as a whole and others are unique to our operations. The impact of any risk or a combination of risks may adversely affect, among other things, our business, reputation, financial condition, results of operations and cash flows, which may reduce or restrict our ability to pursue our strategic priorities, meet our targets or outlooks, goals, initiatives and ambitions, respond to changes in our operating environment, pay dividends to our shareholders, continue with share purchases under our NCIB and fulfill our obligations (including debt servicing requirements) and may materially affect the market price of our securities.

The following provides an update on our risks.

Financial Risk

Commodity Prices

Fluctuations in commodity prices, associated price differentials and refining margins impact our financial condition, results of operations, cash flows, growth, access to capital, our level of shareholder returns and cost of borrowing. We partially mitigate our exposure to commodity price risk through the integration of our business, financial instruments, physical contracts, market access commitments and generally through our access to committed credit facilities. In certain instances, we use financial instruments to manage our exposure to price volatility on a portion of our refined products, crude oil and natural gas production, and related inventory or volumes in long-distance transit. Previously, we had also used derivative instruments to manage our overall exposure to volatility in cash flow using WTI derivative instruments, however, as announced on April 4, 2022, we have suspended our crude oil sales price risk management activities related to WTI. Accordingly, we may continue to use financial instruments to mitigate our exposure to the prices of various commodities, including WTI, utilized in condensate and price risk management for refining operations; and products, including associated price differentials, refined products or feedstock, condensate, electricity and interest and exchange rates applicable to our business. Fluctuations in the price of WTI may have a larger impact on our financial condition, results of operations, cash flows, growth, access to capital, our level of shareholder returns and our cost of borrowing, compared to the periods prior to the suspension of our crude oil sales price risk management activities relating to WTI. For details of our financial instruments, including classification, assumptions made in the calculation of fair value and additional discussion on exposure of risks and the management of those risks, see Notes 26 and 27 to the interim Consolidated Financial Statements.

Risks Associated with Derivative Financial Instruments

Financial instruments expose us to the risk that a counterparty will default on its contractual obligations. This risk is partially mitigated through credit exposure limits, frequent assessment of counterparty credit ratings and netting arrangements, as outlined in our Board-approved Credit Policy.

Financial instruments also expose us to the risk of a loss from adverse changes in the market value of financial instruments or if we are unable to fulfill our delivery obligations related to the underlying physical transaction. These risks are managed through hedging limits authorized according to our Market Risk Management Policy.

Although we have suspended our crude oil sales price risk management activities related to WTI, certain financial instruments related to our condensate, feedstock and refined product price risk management programs which include WTI, remain outstanding and will continue to be utilized. For further details, see Notes 26 and 27 to the interim Consolidated Financial Statements. The WTI contracts impacted by this announcement will be closed by June 30, 2022. As a result we will remain exposed to the risk of a loss from adverse changes in the market value thereof. In addition, we may continue to use financial instruments to manage our exposure to fluctuations in the prices of various commodities and products, including associated price differentials, refined products or feedstock, condensate, electricity and interest and exchange rates applicable to our business. As such, we will be exposed to the risk of a loss from adverse changes in the market value of any such financial instruments. These financial instruments may also limit the benefit to us if commodity prices, interest or foreign exchange rates change.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	36

Impact of Financial Risk Management Activities

Cenovus makes storage and transportation decisions using our marketing and transportation infrastructure, including storage and pipeline assets to optimize product mix, delivery points, transportation commitments and customer diversification. In order to price protect our inventories associated with storage or transport decisions, Cenovus employs various price alignment and volatility management strategies, including risk management contracts, to reduce volatility in future cash flows and improve cash flow stability. Previously, Cenovus's price alignment and volatility management strategy included the use of crude oil sales price risk management activities related to WTI. Although certain of Cenovus’s crude oil sales prices risk management contracts remain outstanding as of March 31, 2022, these contracts will be closed by June 30, 2022. WTI contracts in place to support condensate, feedstock and refined product exposure management were also outstanding as of March 31, 2022, and will continue to be used for those purposes.

Transactions typically span across periods, as such, these transactions reside across both realized and unrealized risk management. As the financial contracts settle, they will flow from unrealized to realized risk management gains and losses.

In a rising commodity price environment, we would expect to realize losses on our risk management activities but recognize gains on the underlying physical inventory sold in the period and the opposite to occur in a falling commodity price environment. In the three months ended March 31, 2022, we incurred a realized loss on our risk management positions due to the settlement of benchmark prices relative to our risk management contract prices, but recognized a gain on the underlying physical inventory sold during such period due to rising benchmark prices. In the three months ended March 31, 2022, unrealized losses were recorded on our crude oil financial instruments primarily due to forward benchmark prices rising above our risk management contract prices that related to future periods and the realization of settled positions.

For the three months ended March 31, 2022, the unrealized risk management loss related to the WTI contracts impacted by this announcement was $370 million. As at March 31, 2022, the risk management liability related to the WTI contracts impacted by this announcement was $380 million.

CRITICAL ACCOUNTING JUDGMENTS, ESTIMATION UNCERTAINTIES AND ACCOUNTING POLICIES

Management is required to make estimates and assumptions, as well as use judgment in the application of accounting policies that could have a significant impact on our financial results. Actual results may differ from estimates and those differences may be material. The estimates and assumptions used are subject to updates based on experience and the application of new information. Our critical accounting policies and estimates are reviewed annually by the Audit Committee of the Board. Further details on the basis of preparation and our significant accounting policies can be found in the notes to the annual Consolidated Financial Statements for the year ended December 31, 2021.

Critical Judgments in Applying Accounting Policies and Key Sources of Estimation Uncertainty

Critical judgments are those judgments made by Management in the process of applying accounting policies that have the most significant effect on the amounts recorded in our annual and interim Consolidated Financial Statements. A full list of the key sources of estimation uncertainty can be found in our annual Consolidated Financial Statements for the year ended December 31, 2021. There have been no changes to our critical judgments used in applying accounting policies and key sources of measurement uncertainty during the three months ended March 31, 2022.

New Accounting Standards and Interpretations not yet Adopted

A number of new accounting standards, amendments to accounting standards and interpretations were effective for annual periods beginning on or after January 1, 2022, but are not material to Cenovus’s operations. There were no new or amended accounting standards or interpretations issued during the three months ended March 31, 2022, that are expected to have a material impact on the Company’s interim Consolidated Financial Statements.

CONTROL ENVIRONMENT

Management, including our President & Chief Executive Officer and Executive Vice-President & Chief Financial Officer, assessed the design and effectiveness of internal control over financial reporting (“ICFR”) and disclosure controls and procedures (“DC&P”) as at March 31, 2022. In making its assessment, Management used the Committee of Sponsoring Organizations of the Treadway Commission Framework in Internal Control – Integrated Framework (2013) to evaluate the design and effectiveness of ICFR. Based on our evaluation, Management has concluded that both ICFR and DC&P were effective as at March 31, 2022.

Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	37
ADVISORY
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Oil and Gas Information

Barrels of Oil Equivalent – natural gas volumes have been converted to BOE on the basis of six Mcf to one bbl. BOE may be misleading, particularly if used in isolation. A conversion 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.

Forward-looking Information

This document contains forward-looking statements and other information (collectively “forward-looking information”) about the Company’s current expectations, estimates and projections, made in light of the Company’s experience and perception of historical trends. Although the Company 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.

This forward-looking information is identified by words such as “anticipate”, “believe”, “capacity”, “commit”, “continue”, “could”, “estimate”, “expect”, “focus”, “forecast”, “future”, “may”, “opportunities”, “option”, “plan”, “potential”, “project”, “progress’, “schedule”, “seek”, “strive”, “target”, “view”, and “will”, or similar expressions and includes suggestions of future outcomes, including, but not limited to, statements about: delivering value over the long-term; maximizing, growing or enhancing shareholder value and/or returns; safety performance and culture; ESG leadership; Free Funds Flow generation, allocation and pay out; returning incremental capital to shareholders; allocating and paying out Excess Free Funds Flow; variable dividend distributions based on Net Debt and share buybacks; funding near-term cash requirements and meeting payment obligations; maintaining investment grade credit ratings; Debt and Net Debt targets; operational strength; capital discipline; strengthening and maintaining a strong balance sheet; flexibility in both high and low commodity price environments; improving the shareholder value proposition; returning incremental capital to shareholders beyond the base dividend payment; opportunistic share repurchases; Net Debt to Adjusted Funds Flow Ratio and Net Debt to Adjusted EBITDA Ratio; the Company’s five key strategic objectives and five ESG focus areas; cost savings and reductions; cost structure; margin enhancement; improving efficiencies to drive incremental capital, operating and general and administrative cost reductions; shortening and optimizing the value chain; sustaining the dividend at US$45 WTI per barrel; upstream production and downstream throughput; maximizing value received for products; optimizing run rates at the Company’s refineries; mitigating the impact of volatility in light-heavy crude oil differentials; mitigating the impact of crude oil and refined product prices and differentials; closing WTI contracts related to the Company’s crude oil sales price risk management activities by June 30, 2022 while continuing to use financial instruments to mitigate exposure to various commodities (including WTI, utilized in condensate and price risk management for refining operations) and products, including associated price differentials and refining margins; initial production and exploration of new fields or projects; planned outages and turnaround activity; financial resilience; adjusting capital and operating spending, drawing down on credit facilities or repaying existing debt, adjusting dividends paid to shareholders, purchasing Cenovus common shares for cancellation, issuing new debt, or issuing new shares; future capital investment; capturing value from crude oil and natural gas production through to the sale of finished products such as transportation fuels; reinvestment in the business and diversification; resuming projects; liabilities from legal proceedings; generating strong margins; the Company’s outlook for commodities and the Canadian dollar; upstream integration; and ramping production up or down.

Readers are cautioned not to place undue reliance on forward-looking information as the Company’s actual results may differ materially from those expressed or implied.

Developing forward-looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to the Company and others that apply to the industry generally. The factors or assumptions on which the forward-looking information is based include, but are not limited to: forecast oil and natural gas, natural gas liquids, condensate and refined products prices, light-heavy crude oil price differentials; the Company’s ability to realize the anticipated benefits and anticipated cost synergies of Arrangement; the Company’s ability to successfully integrate the legacy Husky business with its own and any costs associated therewith; the accuracy of any assessments undertaken in connection with the Arrangement; forecast production and throughput volumes; projected capital investment levels, the flexibility of capital spending plans and associated sources of funding; the absence of significant adverse changes to government policies, legislation and regulations (including related to climate change), Indigenous relations, interest rates, inflation, foreign exchange rates, competitive conditions and the supply and demand for crude oil and natural gas, NGLs, condensate and refined products; the political, economic and social stability of jurisdictions in which the Company operates; the absence of significant disruption of operations, including as a result of harsh weather, natural disaster, accident, civil unrest or other similar events; the prevailing climatic conditions in the Company’s operating locations; achievement of further cost reductions and sustainability thereof; applicable royalty regimes, including expected royalty rates; future improvements in availability of product transportation capacity; increase to the Company’s share price and market capitalization over the long term; opportunities to purchase shares for cancellation at prices acceptable to the Company; the sufficiency of cash balances,

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	38

internally generated cash flows, existing credit facilities, management of the Company’s asset portfolio and access to capital and insurance coverage to pursue and fund future investments, sustainability and development plans and dividends, including any increase thereto; production from the Company’s Conventional segment providing an economic hedge for the natural gas required as a fuel source at both the Company’s oil sands and refining operations; realization of expected capacity to store within the Company’s oil sands reservoirs barrels not yet produced, including that the Company will be able to time production and sales of our inventory at later dates when demand has increased, pipeline and/or storage capacity has improved and future crude oil differentials have narrowed; the WTI-WCS differential in Alberta remains largely tied to the extent to which voluntary economically driven supply cuts are made, the potential start-up of the Enbridge Inc.’s Line 3 Replacement Program, the completion of Trans Mountain Expansion project, and the level of crude-by-rail activity; the ability of the Company’s refining capacity, dynamic storage, existing pipeline commitments, crude-by-rail loading capacity and financial hedge transactions to partially mitigate a portion of the Company’s WCS crude oil volumes against wider differentials; the Company’s ability to produce from oil sands facilities on an unconstrained basis; estimates of quantities of oil, bitumen, natural gas and liquids from properties and other sources not currently classified as proved; the accuracy of accounting estimates and judgments; the Company’s ability to obtain necessary regulatory and partner approvals; the successful, timely and cost effective implementation of capital projects, development projects or stages thereof; the Company’s ability to generate sufficient cash flow to meet current and future obligations; estimated abandonment and reclamation costs, including associated levies and regulations applicable thereto; the Company’s ability to obtain and retain qualified staff and equipment in a timely and cost-efficient manner; the Company’s ability to complete acquisitions and dispositions, including with desired transaction metrics and within expected timelines; the accuracy of climate scenarios and assumptions, including third party data on which the Company relies; ability to access and implement all technology and equipment necessary to achieve expected future results, including in respect of climate and GHG emissions targets and ambitions and the commercial viability and scalability of emission reduction strategies and related technology and products; continuing; collaboration with the government, Oil Sands Pathways to Net Zero and other industry organizations; expected impacts of the contingent payment to ConocoPhillips; alignment of realized WCS and WCS prices used to calculate the contingent payment to ConocoPhillips; market and business conditions; forecast inflation and other assumptions inherent in Cenovus’s 2022 guidance available on cenovus.com and as set out below; the availability of Indigenous owned or operated businesses and Cenovus's ability to retain them; and other risks and uncertainties described from time to time in the filings we make with securities regulatory authorities.

2022 guidance, as updated April 26, 2022 and available on cenovus.com, assumes: Brent prices of US$99.00 per barrel, WTI prices of US$94.00 per barrel; WCS of US$81.00 per barrel; Differential WTI-WCS of US$13.00 per barrel; AECO natural gas prices of $5.20 per thousand cubic feet; Chicago 3-2-1 crack spread of US$26.00 per barrel; and an exchange rate of $0.80 US$/C$.

The risk factors and uncertainties that could cause the Company’s actual results to differ materially from the forward-looking information, include, but are not limited to: the effect of the COVID-19 pandemic, including any variants thereof, on the Company’s business, including any related restrictions, containment, and treatment measures taken by varying levels of government in the jurisdictions in which the Company operates; the success of the Company’s new COVID-19 workplace policies and the return of people to the Company’s workplace; the Company’s ability to realize the anticipated benefits of the Arrangement in a timely manner or at all; the Company’s ability to successfully integrate the legacy Husky business with its own in a timely and cost effective manner; unforeseen or underestimated liabilities associated with the Arrangement; risks associated with acquisitions and dispositions; the Company’s ability to access or implement some or all of the technology necessary to efficiently and effectively operate its assets and achieve expected future results including in respect of climate and GHG emissions targets and ambitions and the commercial viability and scalability of emission reduction strategies and related technology and products; the development and execution of implementing strategies to meet climate and GHG emissions targets and ambitions; the effect of new significant shareholders; volatility of and other assumptions regarding commodity prices; the duration of any market downturn; foreign exchange risk, including related to agreements denominated in foreign currencies; the Company’s continued liquidity is sufficient to sustain operations through a prolonged market downturn; WTI-WCS differential in Alberta does not remain largely tied to the extent to which voluntary economically driven supply cuts are made, the potential start-up of Enbridge Inc.’s Line 3 Replacement Program, the completion of the Trans Mountain Expansion project, and the level of crude-by-rail activity; the Company’s ability to achieve lower transportation costs as a result of temporarily suspending the crude-by-rail program; the Company’s ability to realize the expected impacts of its capacity to store within its oil sands reservoirs barrels not yet produced, including possible inability to time production and sales at later dates when pipeline and/or storage capacity and crude oil differentials have improved; the effectiveness of the Company’s risk management program; the accuracy of cost estimates regarding commodity prices, currency and interest rates; lack of alignment of realized WCS prices and WCS prices used to calculate the contingent payment to ConocoPhillips; product supply and demand; the accuracy of the Company’s share price and market capitalization assumptions; market competition, including from alternative energy sources; risks inherent in the Company’s marketing operations, including credit risks, exposure to counterparties and partners, including the ability and willingness of such parties to satisfy contractual obligations in a timely manner; risks inherent in the operation of the Company’s crude-by-rail terminal, including health, safety and environmental risks; the Company’s ability to maintain desirable ratios of Net Debt to Adjusted EBITDA and Net Debt to Adjusted Funds Flow; the Company’s ability to access various sources of debt and equity capital, generally, and on acceptable terms; the Company’s

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	39

ability to finance growth and sustaining capital expenditures; changes in credit ratings applicable to the Company or any of its securities; changes to the Company’s dividend plans; the Company’s ability to utilize tax losses in the future; the accuracy of the Company’s reserves, future production and future net revenue estimates; the accuracy of the Company’s accounting estimates and judgements; the Company’s ability to replace and expand crude oil and natural gas reserves; the costs to acquire exploration rights, undertake geological studies, appraisal drilling and project developments; potential requirements under applicable accounting standards for impairment or reversal of estimated recoverable amounts of some or all of the Company’s assets or goodwill from time to time; the Company’s ability to maintain its relationships with its partners and to successfully manage and operate its integrated operations and business; reliability of the Company’s assets including in order to meet production targets; potential disruption or unexpected technical difficulties in developing new products and manufacturing processes; the occurrence of unexpected events resulting in operational interruptions, including blowouts, fires, explosions, railcar incidents or derailments, aviation incidents, gaseous leaks, migration of harmful substances, loss of containment, releases or spills, including releases or spills from offshore facilities and shipping vessels at terminals or hubs and as a result of pipeline or other leaks, corrosion, epidemics or pandemics, and catastrophic events, including, but not limited to, war, extreme weather events, natural disasters, iceberg incidents, acts of vandalism and terrorism, and other accidents or hazards that may occur at or during transport to or from commercial or industrial sites and other accidents or similar events; refining and marketing margins; cost escalations, including inflationary pressures on operating costs, such as labour, materials, natural gas and other energy sources used in oil sands processes and increased insurance deductibles or premiums; the cost and availability of equipment necessary to the Company’s operations; potential failure of products to achieve or maintain acceptance in the market; risks associated with the energy industry’s and the Company’s reputation, social license to operate and litigation related thereto; unexpected cost increases or technical difficulties in operating, constructing or modifying manufacturing or refining facilities; unexpected difficulties in producing, transporting or refining bitumen and/or crude oil into petroleum and chemical products; risks associated with technology and equipment and its application to the Company’s business, including potential cyberattacks; geo-political and other risks associated with the Company’s international operations; risks associated with climate change and the Company’s assumptions relating thereto; the timing and the costs of well and pipeline construction; the Company’s ability to access markets and to secure adequate and cost effective product transportation including sufficient pipeline, crude-by-rail, marine or alternate transportation, including to address any gaps caused by constraints in the pipeline system or storage capacity; availability of, and the Company’s ability to attract and retain, critical talent; possible failure to obtain and retain qualified leadership and personnel, and equipment in a timely and cost efficient manner; changes in labour demographics and relationships, including with any unionized workforces; unexpected abandonment and reclamation costs; changes in the regulatory frameworks, permits and approvals in any of the locations in which the Company operates or to any of the infrastructure upon which it relies; government actions or regulatory initiatives to curtail energy operations or pursue broader climate change agendas; changes to regulatory approval processes and land use designations, royalty, tax, environmental, GHG, carbon, climate change and other laws or regulations, or changes to the interpretation of such laws and regulations, as adopted or proposed, the impact thereof and the costs associated with compliance; the expected impact and timing of various accounting pronouncements, rule changes and standards on the Company’s business, its financial results and Consolidated Financial Statements; changes in general economic, market and business conditions; the impact of production agreements among OPEC and non-OPEC members; the political, social and economic conditions in the jurisdictions in which the Company operates or supplies; the status of the Company’s relationships with the communities in which it operates, including with Indigenous communities; the occurrence of unexpected events such as protests, pandemics, war, terrorist threats and the instability resulting therefrom; and risks associated with existing and potential future lawsuits, shareholder proposals and regulatory actions against the Company. In addition, there are risks that the effect of actions taken by us in implementing targets, commitments and ambitions for ESG focus areas may have a negative impact on our existing business, growth plans and future results from operations.

Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. Events or circumstances could cause our actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information. For a full discussion of the Company’s material risk factors, see Risk Management and Risk Factors in this MD&A, and to the risk factors described in other documents the Company files from time to time with securities regulatory authorities in Canada, available on SEDAR at sedar.com, and with the U.S. Securities and Exchange Commission on EDGAR at sec.gov, and on the Company’s website at cenovus.com.

Information on or connected to the Company’s website at cenovus.com does not form part of this MD&A unless expressly incorporated by reference herein.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	40

ABBREVIATIONS

The following abbreviations have been used in this document:

Crude Oil		Natural Gas
bbl	barrel	Mcf	thousand cubic feet
Mbbls/d	thousand barrels per day	MMcf	million cubic feet
MMbbls	million barrels	MMcf/d	million cubic feet per day
BOE	barrel of oil equivalent	Bcf	billion cubic feet
MBOE	thousand barrels of oil equivalent	MMBtu	million British thermal units
MBOE/d	thousand barrels of oil equivalent per day	GJ	gigajoule
MMBOE	million barrels of oil equivalent	AECO	Alberta Energy Company
WTI	West Texas Intermediate	NYMEX	New York Mercantile Exchange
WCS	Western Canadian Select
HSB	Husky Synthetic Blend

SPECIFIED FINANCIAL MEASURES

Certain financial measures in this document do not have a standardized meaning as prescribed by IFRS including Operating Margin, Operating Margin for the Upstream or Downstream segment, Operating Margin by asset, Total Integration Costs, Adjusted Funds Flow, Free Funds Flow, Net Debt, Total Debt, Net Debt to Adjusted EBITDA Ratio, Net Debt to Adjusted Funds Flow Ratio, Net Debt to Capitalization Ratio, Net Debt Target, Net Debt to Adjusted EBITDA Ratio Target, Net Debt to Adjusted Funds Flow Ratio Target, Long-Term Financial Liabilities, Capital Investment by Asset, Gross Margin, Refining Margin, Unit Operating Costs, Forward-looking Operating Costs per Barrel, Forward-looking Capital Investment, Forward-looking Integration Costs, Per Unit DD&A and Netbacks (including the per BOE components of netbacks and total netbacks per BOE).

These measures may not be comparable to similar measures presented by other issuers. These measures have been described and presented in order to provide shareholders and potential investors with additional measures for analyzing our ability to generate funds to finance our operations and information regarding our liquidity. This additional information should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. The definition and reconciliation, if applicable, of each non-GAAP financial measure or specified financial measure is presented in this Advisory and may also be presented in the Operating and Financial Results or Liquidity and Capital Resources sections of this MD&A.

Operating Margin

Operating Margin and Operating Margin by asset are non-GAAP financial measures, and Operating Margin for the Upstream or Downstream segment are specified financial measures. These are used to provide a consistent measure of the cash generating performance of our operations and assets for comparability of our underlying financial performance between periods. Operating Margin is defined as revenues less purchased product, transportation and blending, operating expenses, plus realized gains less realized losses on risk management activities. Items within the Corporate and Eliminations segment are excluded from the calculation of Operating Margin.

	Q1 2022
($ millions)	Upstream (1)	Downstream (1)	Total
Revenues
Gross Sales	10,897	8,247	19,144
Less: Royalties	1,185	—	1,185
	9,712	8,247	17,959
Expenses
Purchased Product	2,089	6,946	9,035
Transportation and Blending	2,923	2	2,925
Operating	909	645	1,554
Realized (Gain) Loss on Risk Management	871	110	981
Operating Margin	2,920	544	3,464

(1)Found in Note 1 of the interim Consolidated Financial Statements.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	41
	2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Upstream					Downstream					Total
($ millions)	2021	Q4	Q3	Q2	Q1	2021	Q4	Q3	Q2	Q1	2021	Q4	Q3	Q2	Q1
Revenues
Gross Sales (1)	27,844	8,237	7,354	6,128	6,125	26,673	8,135	7,530	6,318	4,690	54,517	16,372	14,884	12,446	10,815
Less: Royalties	2,454	815	733	533	373	—	—	—	—	—	2,454	815	733	533	373
	25,390	7,422	6,621	5,595	5,752	26,673	8,135	7,530	6,318	4,690	52,063	15,557	14,151	11,913	10,442
Expenses
Purchased Product (1)	4,843	1,410	1,270	921	1,242	23,526	7,348	6,708	5,502	3,968	28,369	8,758	7,978	6,423	5,210
Transportation and Blending	7,930	2,387	1,941	1,802	1,800	—	—	—	—	—	7,930	2,387	1,941	1,802	1,800
Operating	3,241	865	800	791	785	2,258	689	537	515	517	5,499	1,554	1,337	1,306	1,302
Realized (Gain) Loss on Risk <br>Management	788	202	168	188	230	104	56	17	10	21	892	258	185	198	251
Operating Margin	8,588	2,558	2,442	1,893	1,695	785	42	268	291	184	9,373	2,600	2,710	2,184	1,879

Operating Margin by Asset

	Q1 2022
($ millions)	Asia Pacific		Atlantic		Offshore (1)
Revenues
Gross Sales		395		172		567
Less: Royalties		22		10		32
		373		162		535
Expenses
Transportation and Blending		—		4		4
Operating		27		46		73
Operating Margin		346		112		458
	Q1 2021
---	---	---	---	---	---	---
($ millions)	Asia Pacific		Atlantic		Offshore (1)
Revenues
Gross Sales		321		110		431
Less: Royalties		17		8		25
		304		102		406
Expenses
Transportation and Blending		—		4		4
Operating		22		36		58
Operating Margin		282		62		344

(1)Found in Note 1 of the interim Consolidated Financial Statements.

Total Integration Costs

Total Integration Costs is a non-GAAP financial measure representing costs incurred as a result of the Arrangement, excluding share issuance costs.


( millions)	2022	2021
Integration Costs (1)	24	223
Capitalized Integration Costs (2)	2	22
Total Integration Costs	26	245

All values are in US Dollars.

(1)Per the interim Consolidated Statements of Earnings (Loss).

(2)Included in capital expenditures on the interim Consolidated Statements of Cash Flows.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	42

Adjusted Funds Flow and Free Funds Flow

Adjusted Funds Flow is a non-GAAP financial measure commonly used in the oil and gas industry to assist in measuring a company’s ability to finance its capital programs and meet its financial obligations. Adjusted Funds Flow is defined as cash from (used in) operating activities excluding settlement of decommissioning liabilities and net change in non-cash working capital. Non-cash working capital is composed of accounts receivable and accrued revenues, inventories (excluding non-cash inventory write-downs and reversals), income tax receivable, accounts payable and accrued liabilities and income tax payable.

Free Funds Flow is a non-GAAP financial measure used to assist in measuring the available funds the Company has after financing its capital programs. Free Funds Flow is defined as cash from (used in) operating activities excluding settlement of decommissioning liabilities and net change in non-cash working capital minus capital investment.

	2022	2021				2020
($ millions)	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Cash From (Used in) Operating Activities	1,365	2,184	2,138	1,369	228	250	732	(834)	125
(Add) Deduct:
Settlement of Decommissioning Liabilities	(19)	(35)	(38)	(18)	(11)	(6)	(3)	(2)	(31)
Net Change in Non-Cash Working Capital	(1,199)	271	(166)	(430)	(902)	(77)	328	(363)	310
Adjusted Funds Flow	2,583	1,948	2,342	1,817	1,141	333	407	(469)	(154)
Capital Investment	746	835	647	534	547	242	148	147	304
Free Funds Flow	1,837	1,113	1,695	1,283	594	91	259	(616)	(458)

Debt Measures and Targets

Our Net Debt, Total Debt, Net Debt Target, Net Debt to Capitalization Ratio, Net Debt to Adjusted EBITDA Ratio, Net Debt to Adjusted Funds Flow Ratio, Net Debt to Adjusted EBITDA Ratio Target and Net Debt to Adjusted Funds Flow Ratio Target measures are used to steward our overall debt position and as measures of our overall financial strength.

Net Debt is a specified financial measure used to monitor our capital structure. Our forward-looking Net Debt Target is the desired amount of Net Debt that the Company strives to achieve and maintain. Net Debt is defined as Total Debt net of cash and cash equivalents and short-term investments. Total Debt is defined as short-term borrowings plus the current and long-term portions of long-term debt.

We define Capitalization as Net Debt plus Shareholders’ Equity. We define Adjusted EBITDA as net earnings before finance costs, interest income, income tax expense (recovery), DD&A, exploration expense, goodwill impairments, unrealized gains (losses) on risk management, foreign exchange gains (losses), revaluation gain, re-measurement of contingent payment, gains (losses) on divestiture of assets, other income (loss), net and share of income (loss) from equity-accounted investees calculated on a trailing twelve-month basis.

	2022	2021				2020
As at ($ millions)	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Short-Term Borrowings (1)	62	79	48	65	266	121	137	299	602
Current Portion of Long-Term Debt (1)	—	—	545	632	—	—	—	—	—
Long-Term Debt (1)	11,744	12,385	12,441	12,748	13,947	7,441	7,797	8,085	6,979
Total Debt	11,806	12,464	13,034	13,445	14,213	7,562	7,934	8,384	7,581
Less: Cash and Cash Equivalents (1)	(3,399)	(2,873)	(2,010)	(1,055)	(873)	(378)	(404)	(152)	(160)
Net Debt	8,407	9,591	11,024	12,390	13,340	7,184	7,530	8,232	7,421
Shareholders’ Equity (1)	24,614	23,596	24,373	23,629	23,618	16,707	17,032	17,311	17,734
Capitalization	33,021	33,187	35,397	36,019	36,958	23,891	24,562	25,543	25,155
Net Debt to Capitalization Ratio (percent)	25	29	31	34	36	30	31	32	30
Adjusted EBITDA (2)(3)	9,934	8,086	6,327	4,369	2,584	606	900	1,360	2,386
Net Debt to Adjusted EBITDA Ratio (times)	0.8	1.2	1.7	2.8	5.2	11.9	8.4	6.1	3.1
Adjusted Funds Flow (2)(3)	8,690	7,248	—	—	—	—	—	—	—
Net Debt to Adjusted Funds Flow Ratio (4) (times)	1.0	1.3	—	—	—	—	—	—	—

(1)Per the interim Consolidated Balance Sheets.

(2)Per Note 17 of the interim Consolidated Financial Statements.

(3)Calculated on a trailing twelve-month basis.

(4)New financial metric for monitoring our capital structure and financing requirements as of March 31, 2022.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	43

Total Long-Term Liabilities

Total Long-Term Liabilities is a non-GAAP financial measure. The measure is disclosed to fulfill the requirements of National Instrument 51-102, “Continuous Disclosure Obligations” and is defined as total liabilities less total current liabilities.

	2022	2021				2020
As at ($ millions)	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2	Q1
Total Liabilities	31,029	30,496	30,053	29,580	29,589	16,063	15,825	16,608	15,662
Less: Total Current Liabilities	9,140	7,305	7,124	6,608	5,323	2,359	1,936	2,160	2,335
Total Long-Term Liabilities	21,889	23,191	22,929	22,972	24,266	13,704	13,889	14,448	13,327

Gross Margin, Refining Margin and Unit Operating Expense

Gross Margin, Refining Margin and Unit Operating Expense are specified financial measures used to evaluate the performance of our downstream operations. We define Gross Margin as revenues less purchased product. We define Refining Margin as Gross Margin divided by barrels of crude throughput. We define Unit Operating Expense as operating expenses divided by barrels of crude throughput.

Canadian Manufacturing

	Q1 2022
($ millions)	Lloydminster Upgrader	Lloydminster Refinery	Basis of Refining Margin and Unit Operating Expense Calculation	Other (1)	Per Consolidated Interim Financial Statements
Revenues	802	184	986	58	1,044
Purchased Product	647	143	790	14	804
Gross Margin	155	41	196	44	240
Operating expenses	67	30	97	27	124
	Operating Statistics
	Lloydminster Upgrader	Lloydminster Refinery	Lloydminster Upgrader and Lloydminster Refinery Total
Crude Throughput (Mbbls/d)	70.7	27.4	98.1
Refining Margin ($/bbl)	24.37	16.61	22.20
Unit Operating Expense ($/bbl)	10.59	12.01	10.99

(1)Includes ethanol and crude-by-rail operations, and marketing activities.

	2021
	Lloydminster Upgrader					Lloydminster Refinery					Basis of Refining Margin and Unit Operating Expense Calculation
($ millions)	2021	Q4	Q3	Q2	Q1	2021	Q4	Q3	Q2	Q1	2021	Q4	Q3	Q2	Q1
Revenues	2,559	748	684	601	526	817	206	278	197	136	3,376	954	962	798	662
Purchased Product	2,041	592	556	484	409	659	172	230	152	105	2,700	764	786	636	514
Gross Margin	518	156	128	117	117	158	34	48	45	31	676	190	176	162	148
Operating Expenses	211	55	54	52	50	84	25	20	20	19	295	80	74	72	69
	Basis of Refining Margin and Unit Operating Expense Calculation					Other (1)					Per Interim Consolidated Financial Statements
Revenues	3,376	954	962	798	662	1,096	409	253	290	144	4,472	1,363	1,215	1,088	806
Purchased Product	2,700	764	786	636	514	852	364	200	171	117	3,552	1,128	986	807	631
Gross Margin	676	190	176	162	148	244	45	53	119	27	920	235	229	281	175
Operating Expenses	295	80	74	72	69	93	24	25	20	24	388	104	99	92	93

(1)Includes ethanol and crude-by-rail operations, and marketing activities.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	44
	2021
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Operating Statistics
	Lloydminster Upgrader					Lloydminster Refinery					Lloydminster Upgrader and Lloydminster Refinery Total
	2021	Q4	Q3	Q2	Q1	2021	Q4	Q3	Q2	Q1	2021	Q4	Q3	Q2	Q1
Crude Throughput (Mbbls/d)	79.0	80.4	81.2	76.1	78.4	27.5	27.9	27.1	27.4	27.8	106.5	108.3	108.3	103.5	106.2
Refining Margin (1) ($/bbl)	17.99	21.05	16.93	16.90	16.64	15.64	13.25	19.29	18.03	12.43	17.35	18.95	17.57	17.19	15.54
Unit Operating Expense (1) ($/bbl)	7.28	7.44	7.43	7.44	7.53	8.35	9.81	7.86	7.93	7.75	7.55	7.99	7.38	7.57	7.22

(1)Comparative periods have been restated for the total Canadian Manufacturing refining margin and unit operating expense per barrel metrics to exclude ethanol, crude-by-rail operations and marketing activities from the basis of the calculation.

U.S. Manufacturing

	Three Months Ended March 31,
($ millions)	2022	2021
Revenues (1)	6,509	3,437
Purchased Product (1)	5,482	2,920
Gross Margin	1,027	517
Crude Throughput (Mbbls/d)	403.7	362.9
Refining Margin ($/bbl)	28.26	15.84

(1)Found in Note 1 of the interim consolidated financial statements.

Retail

	Three Months Ended March 31,
($ millions)	2022	2021
Revenues (1)	694	447
Purchased Product (1)	660	417
Gross Margin	34	30

(1)Found in Note 1 of the interim Consolidated Financial Statements.

Per Unit DD&A

Per Unit DD&A is a specified financial measure used to measure DD&A on a per-unit of production basis. We define Per Unit DD&A as DD&A divided by production.

	Q1 2022
($ millions)	Per Consolidated Financial Statements (1)		Reconciling Items (2)	Basis of DD&A per BOE Calculation
Oil Sands		635	13	648
Conventional		80	12	92
Offshore		150	(6)	144
	Q1 2021
---	---	---	---
($ millions)	Per Consolidated Financial Statements (1)		Reconciling Items (2)	Basis of DD&A per BOE Calculation
Oil Sands		612	(49)	563
Conventional		108	(2)	106
Offshore		125	(5)	120

(1)Found in Note 1 of the interim Consolidated Financial Statements.

(2)Includes items depreciated on a straight-line basis, right-of-use assets and asset retirement costs.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	45

Netback Reconciliations

Netback is a non-GAAP financial measure commonly used in the oil and gas industry to assist in measuring operating performance on a per-unit basis. Our Netback calculation is aligned with the definition found in the Canadian Oil and Gas Evaluation Handbook. Netbacks reflect our margin on a per-barrel of oil equivalent basis. Netback is defined as gross sales less royalties, transportation and blending and operating expenses divided by sales volumes. Netbacks do not reflect non-cash write-downs or reversals of product inventory until it is realized when the product is sold. The sales price, transportation and blending costs, and sales volumes exclude the impact of purchased condensate. Condensate is blended with crude oil to transport it to market.

The following tables provide a reconciliation of the items comprising Netbacks to Operating Margin found in our interim Consolidated Financial Statements.

Total Production

Upstream Financial Results

	Per Interim Consolidated Financial Statements		Adjustments					Basis of Netback Calculation
Three Months Ended<br><br>March 31, 2022 ($ millions)	Total Upstream (1)		Condensate	Third-Party Sourced	Internal Consumption (2)	Equity Adjustment (3)	Other (4)	Total<br><br>Upstream
Gross Sales		10,897	(2,487)	(2,021)	(239)	61	(76)		6,135
Royalties		1,185	—	—	—	28	—		1,213
Purchased Product		2,089	—	(2,021)	—	—	(68)		—
Transportation and Blending		2,923	(2,487)	—	—	—	1		437
Operating		909	—	—	(239)	7	(21)		656
Netback		3,791	—	—	—	26	12		3,829
Realized (Gain) Loss on Risk Management		871	—	(4)	—	—	—		867
Operating Margin		2,920	—	4	—	26	12		2,962	Per Interim Consolidated Financial Statements	Adjustments	Basis of Netback Calculation
---	---	---	---	---	---	---	---	---	---
Three Months Ended<br><br>March 31, 2021 ($ millions)	Total Upstream (1)		Condensate	Third-Party Sourced	Internal Consumption (2)	Equity Adjustment (3)	Other (4)	Total<br><br>Upstream
Gross Sales (5)		6,125	(1,368)	(1,196)	(149)	52	(90)		3,374
Royalties		373	—	—	—	7	—		380
Purchased Product (5)		1,242	—	(1,196)	—	—	(46)		—
Transportation and Blending		1,800	(1,368)	—	—	—	(3)		429
Operating		785	—	—	(149)	5	(11)		630
Netback		1,925	—	—	—	40	(30)		1,935
Realized (Gain) Loss on Risk Management		230	—	—	—	—	—		230
Operating Margin		1,695	—	—	—	40	(30)		1,705

(1)Found in Note 1 of the Consolidated Financial Statements.

(2)Represents natural gas volumes produced by the Conventional segment used for internal consumption by the Oil Sands segment.

(3)Revenues and expenses related to the HCML joint venture are accounted for using the equity method for consolidated financial statement purposes.

(4)Other includes construction, transportation and blending and third-party processing margin.

(5)Prior period results were revised for a change in presentation of product swaps and certain third-party purchases used in blending and optimization activities. See the Consolidated Financial Statements and Note 3 of the interim Consolidated Financial Statements for further details.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	46

Oil Sands


Three Months EndedMarch 31, 2022 ( millions)	Foster Creek	Christina Lake	Sunrise	Other Oil Sands (1)	Total Bitumen and Heavy Oil	Natural Gas	Total Oil Sands
Gross Sales	1,820	2,232	232	976	5,260	4	5,264
Royalties	388	584	11	99	1,082	—	1,082
Purchased Product	—	—	—	—	—	—	—
Transportation and Blending	178	151	30	38	397	—	397
Operating	202	219	39	221	681	6	687
Netback	1,052	1,278	152	618	3,100	(2)	3,098
Realized (Gain) Loss on Risk Management							867
Operating Margin							2,231

All values are in US Dollars.

	Basis of Netback Calculation	Adjustments				Per Interim Consolidated Financial Statements (2)
Three Months Ended<br>March 31, 2022 ($ millions)	Total Oil Sands		Condensate	Third-party Sourced	Other (3)	Total Oil Sands
Gross Sales	5,264		2,487	1,415	52	9,218
Royalties	1,082		—	—	—	1,082
Purchased Product	—		—	1,415	68	1,483
Transportation and Blending	397		2,487	—	1	2,885
Operating	687		—	—	15	702
Netback	3,098		—	—	(32)	3,066
Realized (Gain) Loss on Risk Management	867		—	—	—	867
Operating Margin	2,231		—	—	(32)	2,199

---	---	---	---	---	---	---	---
Three Months EndedMarch 31, 2021 ( millions)	Foster Creek	Christina Lake	Sunrise	Other Oil Sands (1)	Total Bitumen and Heavy Oil	Natural Gas	Total Oil Sands
Gross Sales	852	995	123	696	2,666	3	2,669
Royalties	107	167	3	47	324	—	324
Purchased Product	—	—	—	—	—	—	—
Transportation and Blending	173	130	24	80	407	—	407
Operating	169	164	31	211	575	5	580
Netback	403	534	65	358	1,360	(2)	1,358
Realized (Gain) Loss on Risk Management							229
Operating Margin							1,129

All values are in US Dollars.

	Basis of Netback Calculation				Per Interim Consolidated Financial Statements (2)
Three Months Ended<br>March 31, 2021 ($ millions)	Total Oil Sands	Condensate	Third-party Sourced	Other (3)	Total Oil Sands
Gross Sales (4)	2,669	1,368	815	66	4,918
Royalties	324	—	—	—	324
Purchased Product (4)	—	—	815	46	861
Transportation and Blending	407	1,368	—	3	1,778
Operating	580	—	—	5	585
Netback	1,358	—	—	12	1,370
Realized (Gain) Loss on Risk Management	229	—	—	—	229
Operating Margin	1,129	—	—	12	1,141

(1)Includes Tucker, Lloydminster thermal and Lloydminster conventional heavy oil assets. Sale of the Tucker asset closed on January 31, 2022.

(2)Found in Note 1 of the interim Consolidated Financial Statements.

(3)Other includes construction, transportation and blending margin.

(4)Prior period results were revised for a change in presentation of product swaps and certain third-party purchases used in blending and optimization activities. See the Consolidated Financial Statements and Note 3 of the interim Consolidated Financial Statements for further details.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	47

Conventional

	Basis of Netback Calculation	Adjustments		Per Consolidated Financial Statements (1)
Three Months Ended<br>March 31, 2022 ($ millions)	Conventional	Third-party Sourced	Other (2)	Conventional
Gross Sales	482	606	24	1,112
Royalties	71	—	—	71
Purchased Product	—	606	—	606
Transportation and Blending	36	—	(2)	34
Operating	128	—	6	134
Netback	247	—	20	267
Realized (Gain) Loss on Risk Management	—	4	—	4
Operating Margin	247	(4)	20	263
	Basis of Netback Calculation	Adjustments		Per Consolidated Financial Statements (1)
---	---	---	---	---
Three Months Ended<br>March 31, 2021 ($ millions)	Conventional	Third-party Sourced	Other (2)	Conventional
Gross Sales	371	381	24	776
Royalties	24	—	—	24
Purchased Product	—	381	—	381
Transportation and Blending	18	—	—	18
Operating	136	—	6	142
Netback	193	—	18	211
Realized (Gain) Loss on Risk Management	1	—	—	1
Operating Margin	192	—	18	210

(1)Found in Note 1 of the interim Consolidated Financial Statements.

(2)Reflects operating margin from processing facility.

Offshore

						Adjustment	Per Consolidated Financial Statements (2)
Three Months EndedMarch 31, 2022 ( millions)	China	Indonesia (1)	Asia Pacific	Atlantic	Total Offshore	Equity Adjustment (1)	Total Offshore
Gross Sales	395	61	456	172	628	(61)		567
Royalties	22	28	50	10	60	(28)		32
Purchased Product	—	—	—	—	—	—		—
Transportation and Blending	—	—	—	4	4	—		4
Operating	23	11	34	46	80	(7)		73
Netback	350	22	372	112	484	(26)		458
Realized (Gain) Loss on Risk Management					—	—		—
Operating Margin					484	(26)		458

All values are in US Dollars.

							Adjustment	Per Consolidated Financial Statements (2)
Three Months EndedSeptember 30, 2021 ( millions)	China	Indonesia (1)	Asia Pacific	Atlantic	Total Offshore		Equity Adjustment (1)	Total Offshore
Gross Sales	336	60	396	68	464		(60)		404
Royalties	20	11	31	4	35		(11)		24
Purchased Product	—	—	—	—	—		—		—
Transportation and Blending	—	—	—	3	3		—		3
Operating	27	7	34	21	55		(6)		49
Netback	289	42	331	40	371	—	(43)	—	328
Realized (Gain) Loss on Risk Management					—		—		—
Operating Margin					371		(43)	—	328

All values are in US Dollars.

(1)Revenues and expenses related to the HCML joint venture are accounted for using the equity method for consolidated financial statement purposes.

(2)Found in Note 1 of the interim Consolidated Financial Statements.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	48
							Adjustment	Per Consolidated Financial Statements (2)
---	---	---	---	---	---	---	---	---	---
Three Months EndedJune 30, 2021 ( millions)	China	Indonesia (1)	Asia Pacific	Atlantic	Total Offshore		Equity Adjustment (1)	Total Offshore
Gross Sales	308	50	358	119	477		(50)		427
Royalties	16	5	21	9	30		(5)		25
Purchased Product	—	—	—	—	—		—		—
Transportation and Blending	—	—	—	3	3		—		3
Operating	23	8	31	35	66		(7)		59
Netback	269	37	306	72	378	—	(38)	—	340
Realized (Gain) Loss on Risk Management					—		—		—
Operating Margin					378		(38)	—	340

All values are in US Dollars.

						Adjustment	Per Consolidated Financial Statements (2)
Three Months EndedMarch 31, 2021 ( millions)	China	Indonesia (1)	Asia Pacific	Atlantic	Total Offshore	Equity Adjustment (1)	Total Offshore
Gross Sales	321	52	373	110	483	(52)		431
Royalties	17	7	24	8	32	(7)		25
Purchased Product	—	—	—	—	—	—		—
Transportation and Blending	—	—	—	4	4	—		4
Operating	21	6	27	36	63	(5)		58
Netback	283	39	322	62	384	(40)		344
Realized (Gain) Loss on Risk Management					—	—		—
Operating Margin					384	(40)		344

All values are in US Dollars.

(1)Revenues and expenses related to the HCML joint venture are accounted for using the equity method for consolidated financial statement purposes.

(2)Found in Note 1 of the interim Consolidated Financial Statements.

Sales Volumes (1)

The following table provides the sales volumes used to calculate Netback:

	Three Months Ended March 31,
(MBOE/d)	2022		2021
Oil Sands
Foster Creek		200.1		175.0
Christina Lake		263.4		217.5
Sunrise (2)		25.3		24.2
Other Oil Sands		121.1		144.1
Total Oil Sands (2)		609.9		560.8
Conventional		125.2		135.9
Sales before Internal Consumption		735.1		696.7
Less: Internal Consumption (3)		(87.9)		(86.5)
Sales after Internal Consumption		647.2		610.2
Offshore
Asia Pacific - China		53.6		51.4
Asia Pacific - Indonesia		9.1		9.4
Asia Pacific - Total		62.7		60.8
Atlantic		14.6		14.9
Total Offshore		77.3		75.7
Total Sales		724.5		685.9

(1)Presented on dry bitumen basis.

(2)Sunrise sales volumes have been re-presented to reflect a change in classification of marketing activities for the first quarter of 2021.

(3)Less natural gas volumes used for internal consumption by the Oil Sands segment.

Cenovus Energy Inc. – Q1 2022 Management's Discussion and Analysis	49

Document

Exhibit 99.3

Cenovus Energy Inc.

Interim Consolidated Financial Statements (unaudited)

For the Period Ended March 31, 2022

(Canadian Dollars)

CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

For the period ended March 31, 2022
TABLE OF CONTENTS
---		CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (UNAUDITED)	3
---	---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)	4
CONSOLIDATED BALANCE SHEETS (UNAUDITED)	5
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)	6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)	7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	8
1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES	8
2.BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE	13
3.ACCOUNTING POLICIES, CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY	14
4.GENERAL AND ADMINISTRATIVE	14
5.FINANCE COSTS	14
6. INTEGRATION COSTS	15
7. FOREIGN EXCHANGE (GAIN) LOSS, NET	15
8. DIVESTITURES	15
9. INCOME TAXES	15
10. PER SHARE AMOUNTS	16
11. ASSETS HELD FOR SALE	17
12. EXPLORATION AND EVALUATION ASSETS, NET	17
13. PROPERTY, PLANT AND EQUIPMENT, NET	18
14. RIGHT-OF-USE ASSETS, NET	19
15. JOINT ARRANGEMENTS	19
16. OTHER ASSETS	21
17. DEBT AND CAPITAL STRUCTURE	21
18. LEASE LIABILITIES	24
19. CONTINGENT PAYMENT	25
20. DECOMMISSIONING LIABILITIES	25
21. OTHER LIABILITIES	25
22. SHARE CAPITAL AND WARRANTS	26
23. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)	27
24. STOCK-BASED COMPENSATION PLANS	27
25. RELATED PARTY TRANSACTIONS	28
26. FINANCIAL INSTRUMENTS	28
27. RISK MANAGEMENT	30
28. SUPPLEMENTARY CASH FLOW INFORMATION	33
29. COMMITMENTS AND CONTINGENCIES	35
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	2
---	---
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (unaudited)
---

For the period ended March 31,

($ millions, except per share amounts)

		Three Months Ended
	Notes	2022	2021 (1)
Revenues	1
Gross Sales		17,383	9,666
Less: Royalties		1,185	373
		16,198	9,293
Expenses	1
Purchased Product		7,538	4,237
Transportation and Blending		2,919	1,785
Operating		1,287	1,134
(Gain) Loss on Risk Management	26	1,285	194
Depreciation, Depletion and Amortization	13,14	1,030	1,045
Exploration Expense	12	16	6
(Income) Loss From Equity-Accounted Affiliates	15	(4)	(14)
General and Administrative	4	199	163
Finance Costs	5	229	244
Interest Income		(15)	(4)
Integration Costs	6	24	223
Foreign Exchange (Gain) Loss, Net	7	(102)	(117)
Re-measurement of Contingent Payment	19	236	187
(Gain) Loss on Divestiture of Assets	8	(242)	(12)
Other (Income) Loss, Net		(370)	(72)
Earnings (Loss) Before Income Tax		2,168	294
Income Tax Expense (Recovery)	9	543	74
Net Earnings (Loss)		1,625	220
Net Earnings (Loss) Per Common Share ($)	10
Basic		0.81	0.10
Diluted		0.79	0.10

(1) See Note 3 for revisions to comparative results.

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
---

For the period ended March 31,

($ millions)

		Three Months Ended
	Notes	2022	2021
Net Earnings (Loss)		1,625	220
Other Comprehensive Income (Loss), Net of Tax	23
Items That Will not be Reclassified to Profit or Loss:
Actuarial Gain (Loss) Relating to Pension and Other Post-Employment Benefits		30	16
Items That may be Reclassified to Profit or Loss:
Foreign Currency Translation Adjustment		(150)	(133)
Total Other Comprehensive Income (Loss), Net of Tax		(120)	(117)
Comprehensive Income (Loss)		1,505	103

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	4
CONSOLIDATED BALANCE SHEETS (unaudited)
---

As at

($ millions)

	Notes	March 31, 2022	December 31, 2021
Assets
Current Assets
Cash and Cash Equivalents		3,399	2,873
Accounts Receivable and Accrued Revenues		5,987	3,870
Income Tax Receivable		7	22
Inventories		4,661	3,919
Assets Held for Sale	11	530	1,304
Total Current Assets		14,584	11,988
Restricted Cash	20	188	186
Exploration and Evaluation Assets, Net	1,12	723	720
Property, Plant and Equipment, Net	1,13	33,340	34,225
Right-of-Use Assets, Net	1,14	1,963	2,010
Income Tax Receivable		66	66
Investments in Equity-Accounted Affiliates	15	300	311
Other Assets	16	455	431
Deferred Income Taxes		563	694
Goodwill	1	3,473	3,473
Total Assets		55,655	54,104
Liabilities and Equity
Current Liabilities
Accounts Payable and Accrued Liabilities		8,122	6,353
Short-Term Borrowings	17	62	79
Lease Liabilities	18	259	272
Contingent Payment	19	178	236
Income Tax Payable		391	179
Liabilities Related to Assets Held for Sale	11	128	186
Total Current Liabilities		9,140	7,305
Long-Term Debt	17	11,744	12,385
Lease Liabilities	18	2,647	2,685
Decommissioning Liabilities	20	3,304	3,906
Other Liabilities	21	906	929
Deferred Income Taxes		3,288	3,286
Total Liabilities		31,029	30,496
Shareholders’ Equity		24,614	23,596
Non-Controlling Interest		12	12
Total Liabilities and Equity		55,655	54,104
Commitments and Contingencies	29

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	5
CONSOLIDATED STATEMENTS OF EQUITY (unaudited)
---

($ millions)

	Shareholders’ Equity
	Common Shares	Preferred Shares	Warrants	Paid in<br><br>Surplus	Retained<br><br>Earnings	AOCI (1)	Total	Non-Controlling Interest
	(Note 22)	(Note 22)	(Note 22)			(Note 23)
As at December 31, 2020	11,040	—	—	4,391	501	775	16,707	—
Net Earnings (Loss)	—	—	—	—	220	—	220	—
Other Comprehensive Income<br> (Loss), Net of Tax	—	—	—	—	—	(117)	(117)	—
Total Comprehensive Income (Loss)	—	—	—	—	220	(117)	103	—
Common Shares Issued	6,111	—	—	—	—	—	6,111	—
Preferred Shares Issued	—	519	—	—	—	—	519	—
Warrants Issued	—	—	216	—	—	—	216	—
Warrants Exercised	1	—	—	—	—	—	1	—
Stock-Based Compensation <br> Expense	—	—	—	5	—	—	5	—
Dividends on Common Shares	—	—	—	—	(35)	—	(35)	—
Dividends on Preferred Shares	—	—	—	—	(9)	—	(9)	—
Non-Controlling Interest	—	—	—	—	—	—	—	11
As at March 31, 2021	17,152	519	216	4,396	677	658	23,618	11
As at December 31, 2021	17,016	519	215	4,284	878	684	23,596	12
Net Earnings (Loss)	—	—	—	—	1,625	—	1,625	—
Other Comprehensive Income<br> (Loss), Net of Tax	—	—	—	—	—	(120)	(120)	—
Total Comprehensive Income (Loss)	—	—	—	—	1,625	(120)	1,505	—
Common Shares Issued on Exercise <br>of Stock Options	54	—	—	(10)	—	—	44	—
Purchase of Common Shares Under<br><br>NCIB (2) (Note 22)	(210)	—	—	(256)	—	—	(466)	—
Warrants Exercised	14	—	(5)	—	—	—	9	—
Stock-Based Compensation <br>Expense	—	—	—	4	—	—	4	—
Dividends on Common Shares	—	—	—	—	(69)	—	(69)	—
Dividends on Preferred Shares	—	—	—	—	(9)	—	(9)	—
As at March 31, 2022	16,874	519	210	4,022	2,425	564	24,614	12

(1) Accumulated other comprehensive income (loss) (“AOCI”).

(2) Normal course issuer bid (“NCIB”).

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	6
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
---

For the period ended March 31,

($ millions)

	Notes	2022	2021
Operating Activities
Net Earnings (Loss)		1,625	220
Depreciation, Depletion and Amortization	13,14	1,030	1,045
Exploration Expense		—	10
Inventory Write-Down (Reversal)		—	16
Realization of Inventory Write-Downs		—	(15)
Deferred Income Tax Expense (Recovery)	9	118	27
Unrealized (Gain) Loss on Risk Management	26	311	(148)
Unrealized Foreign Exchange (Gain) Loss	7	(139)	(139)
Realized Foreign Exchange (Gain) Loss on Non-Operating Items		26	(2)
Re-measurement of Contingent Payment, Net of Cash Paid		76	187
(Gain) Loss on Divestiture of Assets	8	(242)	(12)
Unwinding of Discount on Decommissioning Liabilities	20	44	48
(Income) Loss From Equity-Accounted Affiliates	15	(4)	(14)
Distributions Received From Equity-Accounted Affiliates	15	17	28
Other		(279)	(110)
Settlement of Decommissioning Liabilities		(19)	(11)
Net Change in Non-Cash Working Capital	28	(1,199)	(902)
Cash From (Used in) Operating Activities		1,365	228
Investing Activities
Capital Expenditures	12,13	(746)	(547)
Proceeds From Divestitures	8	950	5
Cash Acquired Through Business Combination		—	735
Net Change in Investments and Other		(126)	—
Net Change in Non-Cash Working Capital	28	259	11
Cash From (Used in) Investing Activities		337	204
Net Cash Provided (Used) Before Financing Activities		1,702	432
Financing Activities	28
Net Issuance (Repayment) of Short-Term Borrowings		(16)	107
(Repayment) of Long-Term Debt		(510)	—
Net Issuance (Repayment) of Revolving Long-Term Debt		—	50
Principal Repayment of Leases	18	(75)	(75)
Common Shares Issued Under Stock Option Plans		44	—
Purchase of Common Shares Under NCIB	22	(466)	—
Dividends Paid on Common Shares	10	(69)	(35)
Dividends Paid on Preferred Shares	10	(9)	(9)
Other		8	1
Cash From (Used in) Financing Activities		(1,093)	39
Effect of Foreign Exchange on Cash and Cash Equivalents		(83)	24
Increase (Decrease) in Cash and Cash Equivalents		526	495
Cash and Cash Equivalents, Beginning of Period		2,873	378
Cash and Cash Equivalents, End of Period		3,399	873

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES

Cenovus Energy Inc., including its subsidiaries, (together “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 New York Stock Exchange. Cenovus’s cumulative redeemable preferred shares series 1, 2, 3, 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 makers. 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

•Conventional, includes assets rich in natural gas liquids (“NGLs”) and natural gas within the Elmworth-Wapiti, Kaybob‑Edson, Clearwater and Rainbow Lake operating areas in Alberta and British Columbia and 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, which provides flexibility for market access to optimize product mix, delivery points, transportation commitments and customer diversification.

Downstream Segments

Corporate and Eliminations

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

The following tabular financial information presents segmented information first by segment, then by product and geographic location.

A) Results of Operations – Segment and Operational Information (1)

		Upstream
For the three months ended March 31,		Oil Sands				Conventional				Offshore				Total
	2022		2021 (1)		2022		2021		2022		2021		2022		2021 (1)
Revenues
Gross Sales		9,218		4,918		1,112		776		567		431		10,897		6,125
Less: Royalties		1,082		324		71		24		32		25		1,185		373
		8,136		4,594		1,041		752		535		406		9,712		5,752
Expenses
Purchased Product		1,483		861		606		381		—		—		2,089		1,242
Transportation and Blending		2,885		1,778		34		18		4		4		2,923		1,800
Operating		702		585		134		142		73		58		909		785
Realized (Gain) Loss on Risk <br> Management		867		229		4		1		—		—		871		230
Operating Margin		2,199		1,141		263		210		458		344		2,920		1,695
Unrealized (Gain) Loss on Risk<br><br>Management		266		(141)		—		(1)		—		—		266		(142)
Depreciation, Depletion and <br> Amortization		635		612		80		108		150		125		865		845
Exploration Expense		1		11		—		(4)		15		(1)		16		6
(Income) Loss From Equity-<br> Accounted Affiliates		—		—		—		—		(4)		(12)		(4)		(12)
Segment Income (Loss)		1,297		659		183		107		297		232		1,777		998

(1)Prior period results were revised for a change in presentation of product swaps and certain third-party purchases used in blending and optimization activities. See Note 3 below and the annual Consolidated Financial Statements for the year ended December 31, 2021, for further details.

		Downstream
For the three months ended March 31,		Canadian Manufacturing				U.S. Manufacturing				Retail				Total
	2022		2021		2022		2021		2022		2021		2022		2021
Revenues
Gross Sales		1,044		806		6,509		3,437		694		447		8,247		4,690
Less: Royalties		—		—		—		—		—		—		—		—
		1,044		806		6,509		3,437		694		447		8,247		4,690
Expenses
Purchased Product		804		631		5,482		2,920		660		417		6,946		3,968
Transportation and Blending		2		—		—		—		—		—		2		—
Operating		124		93		494		405		27		19		645		517
Realized (Gain) Loss on Risk<br> Management		—		—		110		21		—		—		110		21
Operating Margin		114		82		423		91		7		11		544		184
Unrealized (Gain) Loss on Risk Management		—		—		27		10		—		—		27		10
Depreciation, Depletion and<br> Amortization		42		43		85		114		8		12		135		169
Exploration Expense		—		—		—		—		—		—		—		—
(Income) Loss From Equity-<br> Accounted Affiliates		—		—		—		—		—		—		—		—
Segment Income (Loss)		72		39		311		(33)		(1)		(1)		382		5
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	9
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022


For the three months ended March 31,	2022	2021	2022	2021 (1)
Revenues
Gross Sales		(1,761)	(1,149)	17,383	9,666
Less: Royalties		—	—	1,185	373
		(1,761)	(1,149)	16,198	9,293
Expenses
Purchased Product		(1,497)	(973)	7,538	4,237
Transportation and Blending		(6)	(15)	2,919	1,785
Operating		(267)	(168)	1,287	1,134
Realized (Gain) Loss on Risk Management		(7)	91	974	342
Unrealized (Gain) Loss on Risk Management		18	(16)	311	(148)
Depreciation, Depletion and Amortization		30	31	1,030	1,045
Exploration Expense		—	—	16	6
(Income) Loss From Equity-Accounted Affiliates		—	(2)	(4)	(14)
Segment Income (Loss)		(32)	(97)	2,127	906
General and Administrative		199	163	199	163
Finance Costs		229	244	229	244
Interest Income		(15)	(4)	(15)	(4)
Integration Costs		24	223	24	223
Foreign Exchange (Gain) Loss, Net		(102)	(117)	(102)	(117)
Re-measurement of Contingent Payment		236	187	236	187
(Gain) Loss on Divestiture of Assets		(242)	(12)	(242)	(12)
Other (Income) Loss, Net (2)		(370)	(72)	(370)	(72)
		(41)	612	(41)	612
Earnings (Loss) Before Income Tax				2,168	294
Income Tax Expense (Recovery)				543	74
Net Earnings (Loss)				1,625	220

(2)Other (income) loss, net includes insurance proceeds related to the 2018 Superior Refinery incident of $269 million (three months ended March 31, 2021 – $45 million), and insurance proceeds related to the 2018 incident in the Atlantic region of $52 million (three months ended March 31, 2021 – $nil).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

B) Revenues by Product

For the three months ended March 31,	2022	2021
Upstream (1)
Crude Oil	7,653	4,246
NGLs	1,062	618
Natural Gas	897	776
Other	100	112
Downstream
Canadian Manufacturing
Synthetic Crude Oil	370	346
Diesel and Distillate	130	85
Asphalt	84	65
Other Products and Services	460	310
U.S. Manufacturing
Gasoline	3,228	1,768
Diesel and Distillate	2,160	1,231
Other Products	1,121	438
Retail	694	447
Corporate and Eliminations	(1,761)	(1,149)
Consolidated	16,198	9,293

C) Geographical Information

	Revenues (1)
For the three months ended March 31,	2022	2021
Canada (2)	8,798	5,512
United States	7,026	3,477
China	374	304
Consolidated	16,198	9,293

(1)Revenues by country are classified based on where the operations are located.

(2)Prior period results were revised for a change in presentation of product swaps and certain third-party purchases used in blending and optimization activities. See Note 3 below and the annual Consolidated Financial Statements for the year ended December 31, 2021, for further details.

	Non-Current Assets (1)
As at	March 31,<br>2022	December 31,<br>2021
Canada (2)	33,206	33,981
United States	4,118	4,093
China	2,397	2,583
Indonesia	300	311
Consolidated	40,021	40,968

(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.

(2)Excludes assets held for sale of $530 million in the Retail segment (December 31, 2021 – Retail segment - $552 million, Oil Sands segment - $593 million and Conventional segment - $159 million).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

D) Assets by Segment (1)

	E&E Assets		PP&E		ROU Assets
As at	March 31,<br>2022	December 31,<br>2021	March 31,<br>2022	December 31,<br>2021	March 31,<br>2022	December 31,<br>2021
Oil Sands	659	653	22,117	22,535	758	754
Conventional	5	6	1,983	2,174	2	2
Offshore	59	61	2,577	2,822	157	160
Canadian Manufacturing	—	—	2,311	2,353	313	339
U.S. Manufacturing	—	—	3,784	3,745	243	252
Retail	—	—	195	205	43	49
Corporate and Eliminations	—	—	373	391	447	454
Consolidated	723	720	33,340	34,225	1,963	2,010	Goodwill	Total Assets
---	---	---	---	---
As at	March 31,<br>2022	December 31,<br>2021	March 31,<br>2022	December 31,<br>2021
Oil Sands (1)	3,473	3,473	31,809	31,070
Conventional (1)	—	—	3,048	3,026
Offshore	—	—	3,342	3,597
Canadian Manufacturing	—	—	2,854	2,918
U.S. Manufacturing	—	—	8,438	7,777
Retail (1)	—	—	986	966
Corporate and Eliminations	—	—	5,178	4,750
Consolidated	3,473	3,473	55,655	54,104

(1)Total assets includes assets held for sale of $530 million in the Retail segment (December 31, 2021 – Retail segment - $552 million, Oil Sands segment - $593 million and Conventional segment - $159 million).

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

E) Capital Expenditures (1)

For the three months ended March 31,	2022	2021
Capital Investment
Oil Sands	375	218
Conventional	88	66
Offshore
Asia Pacific	—	2
Atlantic	53	24
Total Upstream	516	310
Canadian Manufacturing	14	4
U.S. Manufacturing	207	205
Retail	1	1
Total Downstream	222	210
Corporate and Eliminations	8	27
	746	547
Acquisition Capital
Oil Sands	—	3
Conventional	—	4
	—	7
Acquisitions (2)
Oil Sands	—	5,002
Conventional	—	547
Offshore	—	3,045
Canadian Manufacturing	—	2,283
U.S. Manufacturing	—	1,618
Retail	—	690
Corporate and Eliminations	—	156
	—	13,341
Total Capital Expenditures	746	13,895

(1)Includes expenditures on PP&E and E&E assets.

(2)Relates to the January 1, 2021, transaction, which combined Cenovus and Husky Energy Inc. (“Husky”). For more details see Note 5 of the annual Consolidated Financial Statements for the year ended December 31, 2021.

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 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard 34, “Interim Financial Reporting”, and have been prepared following the same accounting policies and methods of computation as the annual Consolidated Financial Statements for the year ended December 31, 2021, except for income taxes. Income taxes on earnings or loss in the interim periods are accrued using the income tax rate that would be applicable to the expected total annual earnings or loss.

Certain information and disclosures normally included in the notes to the annual Consolidated Financial Statements have been condensed or have been disclosed on an annual basis only. Accordingly, these interim Consolidated Financial Statements should be read in conjunction with the annual Consolidated Financial Statements for the year ended December 31, 2021, which have been prepared in accordance with IFRS as issued by the IASB.

These interim Consolidated Financial Statements were approved by the Board of Directors effective April 26, 2022.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

3. ACCOUNTING POLICIES, CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

Accounting policies, a list of critical accounting judgments and key sources of estimation uncertainty can be found in the Company’s annual Consolidated Financial Statements for the year ended December 31, 2021.

Adjustments to the Consolidated Statements of Earnings (Loss)

Certain comparative information for the three months ended March 31, 2021, presented in the Consolidated Statements of Earnings (Loss) within the Oil Sands segment, was revised. The Company made adjustments to more appropriately record certain third-party purchases used for blending and optimization activities and to ensure consistent treatment of product swaps. As a result, revenues and purchased product increased, with no impact to net earnings (loss), segment income (loss), cash flows or financial position. Refer to the annual Consolidated Financial Statements for the year ended December 31, 2021, for further details.

	Three Months Ended<br>March 31, 2021
Oil Sands Segment	Previously Reported	Revision	Revised
Gross Sales	4,775	143	4,918
Purchased Product	718	143	861
	4,057	—	4,057
4. GENERAL AND ADMINISTRATIVE
---		For the three months ended March 31,	2022	2021
---	---	---
Salaries and Benefits	72	70
Administrative and Other	29	58
Stock-Based Compensation Expense (Recovery) (Note 24)	107	35
Other Incentive Benefits Expense (Recovery)	(9)	—
	199	163
5. FINANCE COSTS
---		For the three months ended March 31,	2022	2021
---	---	---
Interest Expense – Short-Term Borrowings and Long-Term Debt	130	142
Net Premium (Discount) on Redemption of Long-Term Debt (Note 17)	7	—
Interest Expense – Lease Liabilities (Note 18)	42	44
Unwinding of Discount on Decommissioning Liabilities (Note 20)	44	48
Other	6	10
	229	244
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	14
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

6. INTEGRATION COSTS

On January 1, 2021, Cenovus and Husky closed a transaction to combine the two companies through a plan of arrangement (the “Arrangement”). For more details see Note 5 of the annual Consolidated Financial Statements for the year ended December 31, 2021. Integration costs recognized in earnings include the following:

For the three months ended March 31,	2022	2021
Transaction Costs (1)	—	65
Integration Related Costs	23	13
Severance Payments	1	145
	24	223

(1)Excludes share issuance costs related to common shares, preferred shares and warrants.

| 7. FOREIGN EXCHANGE (GAIN) LOSS, NET | | --- || For the three months ended March 31, | 2022 | 2021 | | --- | --- | --- | | Unrealized Foreign Exchange (Gain) Loss on Translation of: | | | | U.S. Dollar Debt Issued From Canada | (153) | (130) | | Other | 14 | (9) | | Unrealized Foreign Exchange (Gain) Loss | (139) | (139) | | Realized Foreign Exchange (Gain) Loss | 37 | 22 | | | (102) | (117) | | 8. DIVESTITURES | | --- |

On January 31, 2022, the Company closed the sale of its Tucker asset in its Oil Sands segment for net proceeds of $730 million and recorded a before-tax gain of $166 million (after-tax gain – $127 million).

On February 28, 2022, the Company closed the sale of its Wembley assets in its Conventional segment for net proceeds of $220 million and recorded a before-tax gain of $78 million (after-tax gain – $60 million).

9. INCOME TAXES

The provision for income taxes is:

For the three months ended March 31,	2022	2021
Current Tax
Canada	367	12
United States	20	—
Asia Pacific	38	34
Other International	—	1
Total Current Tax Expense (Recovery)	425	47
Deferred Tax Expense (Recovery)	118	27
	543	74
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	15
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

10. PER SHARE AMOUNTS

A) Net Earnings (Loss) Per Common Share – Basic and Diluted

For the three months ended March 31,	2022	2021
Net Earnings (Loss)	1,625	220
Effect of Cumulative Dividends on Preferred Shares	(9)	(9)
Net Earnings (Loss) – Basic and Diluted	1,616	211
Basic – Weighted Average Number of Shares	1,989.9	2,017.4
Dilutive Effect of Warrants	42.5	17.3
Dilutive Effect of Net Settlement Rights	9.1	—
Diluted – Weighted Average Number of Shares	2,041.5	2,034.7
Net Earnings (Loss) Per Common Share – Basic ($)	0.81	0.10
Net Earnings (Loss) Per Common Share – Diluted (1) ($)	0.79	0.10

Excluded from the calculation of diluted net earnings (loss) per share for the three months ended March 31, 2022, were net earnings of $18 million (three months ended March 31, 2021 – $5 million), and 2.1 million (three months ended March 31, 2021 – 1.9 million) common shares related to the assumed exercise of Cenovus replacement stock options as the impact was anti-dilutive. These instruments could potentially dilute earnings per share in the future.

B) Common Share Dividends

For the three months ended March 31, 2022, the Company paid dividends of $69 million or $0.0350 per common share (three months ended March 31, 2021 – $35 million or $0.0175 per common share). The declaration of common share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.

On April 26, 2022, the Company’s Board of Directors declared a second quarter dividend of $0.105 per common share, payable on June 30, 2022, to common shareholders of record as at June 15, 2022.

C) Preferred Share Dividends

For the three months ended March 31,	2022	2021
Series 1 First Preferred Shares	2	2
Series 2 First Preferred Shares	—	—
Series 3 First Preferred Shares	3	3
Series 5 First Preferred Shares	2	2
Series 7 First Preferred Shares	2	2
Total Declared and Paid Preferred Share Dividends	9	9

The declaration of preferred share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly. If a dividend on any preferred share is not paid in full on any dividend payment date, then a dividend restriction on the common shares shall apply. The preferred share dividends are cumulative.

On April 26, 2022, the Company’s Board of Directors declared second quarter dividends for Cenovus’s preferred shares, payable on June 30, 2022, in the amount of $9 million, to preferred shareholders of record as at June 15, 2022.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

11. ASSETS HELD FOR SALE

On November 30, 2021, the Company entered into agreements to sell 337 gas stations in the Retail segment, located across Western Canada and Ontario, for gross proceeds of $420 million. The transactions are expected to close in mid-2022. Operating margin associated with the retail assets held for sale for the three months ended March 31, 2022, was $16 million (March 31, 2021 – $14 million).

In the three months ended March 31, 2022, the Company closed the sale of its Tucker and Wembley assets (see Note 8).

Assets held for sale are carried at the lesser of the carrying amount and the fair value less cost to sell.

As at March 31, 2022	PP&E	ROU Assets	Goodwill	Lease Liabilities	Decommissioning Liabilities
Retail Gas Stations	476	54	—	(55)	(73)	As at December 31, 2021	PP&E	ROU Assets	Goodwill	Lease Liabilities	Decommissioning Liabilities
---	---	---	---	---	---
Retail Gas Stations	498	54	—	(58)	(86)
Tucker	505	—	88	—	(33)
Wembley	159	—	—	—	(9)
	1,162	54	88	(58)	(128)
12. EXPLORATION AND EVALUATION ASSETS, NET
---		As at December 31, 2021	720
---	---
Additions	10
Change in Decommissioning Liabilities	(7)
As at March 31, 2022	723
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	17
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

| 13. PROPERTY, PLANT AND EQUIPMENT, NET | | --- || | Oil and Gas Properties | Processing, Transportation and Storage Assets | Manufacturing Assets | Retail and Other (1) | Total | | --- | --- | --- | --- | --- | --- | | COST | | | | | | | As at December 31, 2021 | 38,443 | 228 | 10,495 | 1,735 | 50,901 | | Additions | 506 | 1 | 220 | 9 | 736 | | Change in Decommissioning Liabilities | (539) | (3) | (45) | (12) | (599) | | Exchange Rate Movements and Other | (32) | 1 | (129) | 8 | (152) | | As at March 31, 2022 | 38,378 | 227 | 10,541 | 1,740 | 50,886 | | ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION | | | | | | | As at December 31, 2021 | 10,912 | 53 | 4,572 | 1,139 | 16,676 | | Depreciation, Depletion and Amortization | 808 | 9 | 109 | 31 | 957 | | Exchange Rate Movements and Other | (19) | (2) | (68) | 2 | (87) | | As at March 31, 2022 | 11,701 | 60 | 4,613 | 1,172 | 17,546 | | CARRYING VALUE | | | | | | | As at December 31, 2021 | 27,531 | 175 | 5,923 | 596 | 34,225 | | As at March 31, 2022 | 26,677 | 167 | 5,928 | 568 | 33,340 |

(1)Other assets includes office furniture, fixtures, leasehold improvements, information technology and aircraft.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

| 14. RIGHT-OF-USE ASSETS, NET | | --- || | Real Estate | Transportation and Storage Assets (1) | Manufacturing Assets | Retail and Other | Total | | --- | --- | --- | --- | --- | --- | | COST | | | | | | | As at December 31, 2021 | 592 | 1,841 | 161 | 62 | 2,656 | | Additions | — | 3 | — | — | 3 | | Modifications | 2 | 27 | — | (1) | 28 | | Re-measurements | — | 1 | 2 | (1) | 2 | | Terminations | — | (6) | — | — | (6) | | Exchange Rate Movements and Other | (1) | (12) | (3) | (1) | (17) | | As at March 31, 2022 | 593 | 1,854 | 160 | 59 | 2,666 | | ACCUMULATED DEPRECIATION | | | | | | | As at December 31, 2021 | 92 | 520 | 33 | 1 | 646 | | Depreciation | 9 | 55 | 5 | 4 | 73 | | Terminations | — | (6) | — | — | (6) | | Exchange Rate Movements and Other | — | (6) | (4) | — | (10) | | As at March 31, 2022 | 101 | 563 | 34 | 5 | 703 | | CARRYING VALUE | | | | | | | As at December 31, 2021 | 500 | 1,321 | 128 | 61 | 2,010 | | As at March 31, 2022 | 492 | 1,291 | 126 | 54 | 1,963 |

(1)Transportation and storage assets include railcars, barges, vessels, pipelines, caverns and storage tanks.

15. JOINT ARRANGEMENTS

A) Joint Operations

BP-Husky Refining LLC

Cenovus holds a 50 percent interest in Toledo with BP, who holds the remaining interest and operates the Toledo Refinery in Ohio.

Sunrise Oil Sands Partnership

Cenovus, as the operator, holds a 50 percent interest in Sunrise, an oil sands project in northern Alberta, with BP Canada who holds the remaining interest.

WRB Refining LP

Cenovus holds a 50 percent interest in WRB with Phillips 66, who holds the remaining interest and operates the Wood River Refinery in Illinois and the Borger Refinery in Texas.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

B) Joint Ventures

Husky-CNOOC Madura Ltd.

The Company holds a 40 percent interest in the jointly controlled entity, HCML, which is engaged in the exploration for and production of natural gas resources in offshore Indonesia. The Company’s share of equity investment income (loss) related to the joint venture is included in the Consolidated Statements of Earnings (Loss) in the Offshore segment.

Summarized below is the financial information for HCML accounted for using the equity method.

Results of Operations

For the three months ended March 31,	2022	2021
Revenue	66	119
Expenses	64	127
Net Earnings (Loss)	2	(8)

Balance Sheet

As at	March 31,<br>2022	December 31, 2021
Current Assets (1)	149	167
Non-Current Assets	1,408	1,433
Current Liabilities	77	62
Non-Current Liabilities	846	896
Net Assets	634	642

(1)Includes cash and cash equivalents of $68 million (December 31, 2021 – $46 million).

For the three months ended March 31, 2022, the Company’s share of income from the equity-accounted affiliate was $4 million (three months ended March 31, 2021 – $12 million). As at March 31, 2022, the carrying amount of the Company’s share of net assets was $300 million (December 31, 2021 – $311 million). These amounts do not equal the 40 percent joint control of the revenues, expenses and net assets of HCML due to differences in the values attributed to the investment and accounting policies between the joint venture and the Company.

For the three months ended March 31, 2022, the Company received $17 million of distributions from HCML (three months ended March 31, 2021 – $28 million) and paid $8 million in contributions (three months ended March 31, 2021 – $nil).

Husky Midstream Limited Partnership

The Company jointly owns and operates HMLP, which owns midstream assets, including pipeline, storage and other ancillary infrastructure assets in Alberta and Saskatchewan. The Company holds a 35 percent interest in HMLP, with Power Assets Holdings Ltd. holding a 49 percent interest and CK Infrastructure Holdings Ltd. holding a 16 percent interest in HMLP.

For the three months ended March 31, 2022, HMLP had net earnings of $46 million (three months ended March 31, 2021 –$26 million). The Company’s share of (income) loss from the equity-accounted affiliate does not equal the 35 percent of the net earnings of HMLP due to the nature of the profit-sharing arrangement as defined in the partnership agreement. The Company’s share of earnings will fluctuate depending on certain income thresholds. For the three months ended March 31, 2022, the Company did not record its pre-tax net income relating to HMLP of $1 million (three months ended March 31, 2021 – $7 million). The carrying value was $nil at March 31, 2022 (December 31, 2021 – $nil).

As at March 31, 2022, the Company had $4 million in cumulative unrecognized losses and OCI, net of tax (March 31, 2021 – $4 million). The Company records its share of equity investment income related to the joint venture only in excess of the cumulated unrecognized loss and is included in the Consolidated Statements of Earnings (Loss) in the Oil Sands segment.

For the three months ended March 31, 2022, the Company received $nil in distributions (three months ended March 31, 2021 – $nil), and paid $nil in contributions (three months ended March 31, 2021 – $nil) to HMLP. The net amount of the distributions received and contributions paid are recorded in earnings from equity-accounted affiliates.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

| 16. OTHER ASSETS | | --- || As at | March 31, 2022 | December 31, 2021 | | --- | --- | --- | | Intangible Assets | 76 | 78 | | Private Equity Investments (Note 26) | 53 | 53 | | Other Equity Investments | 99 | 77 | | Net Investment in Finance Leases | 62 | 60 | | Long-Term Receivables and Prepaids | 85 | 77 | | Precious Metals | 80 | 85 | | Other | — | 1 | | | 455 | 431 | | 17. DEBT AND CAPITAL STRUCTURE | | --- |

A) Short-Term Borrowings

As at	Notes	March 31,<br>2022	December 31, 2021
Uncommitted Demand Facilities	i	—	—
WRB Uncommitted Demand Facilities	ii	62	79
Sunrise Uncommitted Demand Credit Facility	iii	—	—
Total Debt Principal		62	79

i) Uncommitted Demand Facilities

As at March 31, 2022, the Company had uncommitted demand facilities of $1.9 billion (December 31, 2021 – $1.9 billion) in place, of which $1.4 billion (December 31, 2021 – $1.4 billion) may be drawn for general purposes, or the full amount may be available to issue letters of credit. As at March 31, 2022, there were outstanding letters of credit aggregating to $543 million (December 31, 2021 – $565 million) and no direct borrowings.

ii) WRB Uncommitted Demand Facilities

As at March 31, 2022, WRB had uncommitted demand facilities of US$450 million (the Company’s proportionate share – US$225 million), which may be used to cover short-term working capital requirements. As at December 31, 2021, WRB had uncommitted demand facilities of US$300 million (the Company’s proportionate share – US$150 million).

iii) Sunrise Uncommitted Demand Credit Facility

As at March 31, 2022, and December 31, 2021, Sunrise had an uncommitted demand credit facility of $10 million (the Company’s proportionate share – $5 million), which is available for general purposes.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

B) Long-Term Debt

As at	Notes	March 31,<br>2022	December 31, 2021
Committed Credit Facility (1)	i	—	—
U.S. Dollar Denominated Unsecured Notes	ii	8,748	9,363
Canadian Dollar Unsecured Notes	ii	2,750	2,750
Total Debt Principal		11,498	12,113
Debt Premiums (Discounts), Net, and Transaction Costs		246	272
Long-Term Debt		11,744	12,385

(1)Committed credit facility may include Bankers’ Acceptances, London Interbank Offered Rate based loans, prime rate loans and U.S. base rate loans.

i) Committed Credit Facility

As at March 31, 2022, Cenovus had in place a committed credit facility that consists of a $2.0 billion tranche and a $4.0 billion tranche with a maturity date of August 18, 2024, and August 18, 2025, respectively. As at March 31, 2022, no amount was drawn on the credit facility (December 31, 2021 – $nil).

ii) U.S. Dollar Denominated Unsecured Notes and Canadian Dollar Unsecured Notes

On February 9, 2022, Cenovus redeemed the entire outstanding principal amount of its 3.80 percent notes due September 15, 2023, and 4.00 percent notes due April 15, 2024, for US$402 million. A net premium on redemption of $7 million was recorded in finance costs.

The principal amounts of the Company’s outstanding unsecured notes are:

	March 31, 2022		December 31, 2021
	US$ Principal	C$ Principal and Equivalent	US$ Principal	C$ Principal <br>and Equivalent
U.S. Dollar Unsecured Notes
3.80% due September 15, 2023	—	—	115	146
4.00% due April 15, 2024	—	—	269	341
5.38% due July 15, 2025	666	832	666	844
4.25% due April 15, 2027	962	1,202	962	1,220
4.40% due April 15, 2029	750	937	750	951
2.65% due January 15, 2032	500	625	500	634
5.25% due June 15, 2037	583	729	583	739
6.80% due September 15, 2037	387	483	387	490
6.75% due November 15, 2039	1,390	1,738	1,390	1,763
4.45% due September 15, 2042	155	194	155	197
5.20% due September 15, 2043	58	72	58	73
5.40% due June 15, 2047	800	999	800	1,014
3.75% due February 15, 2052	750	937	750	951
	7,001	8,748	7,385	9,363
Canadian Dollar Unsecured Notes
3.55% due March 12, 2025	—	750	—	750
3.60% due March 10, 2027	—	750	—	750
3.50% due February 7, 2028	—	1,250	—	1,250
	—	2,750	—	2,750
Total Unsecured Notes	7,001	11,498	7,385	12,113

As at March 31, 2022, 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 agreements, not to exceed 65 percent. The Company is well below this limit.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

C) Capital Structure

Cenovus’s capital structure consists of shareholders’ equity plus 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, and is used in managing the Company’s capital. 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, 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, specified financial measures consisting of Net Debt to adjusted earnings before interest, taxes and DD&A (“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. Net Debt to Adjusted Funds Flow is a new metric as at March 31, 2022.

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 billion over the long-term at a 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.

Net Debt to Adjusted EBITDA

As at	March 31,<br> 2022	December 31, 2021
Short-Term Borrowings	62	79
Long-Term Portion of Long-Term Debt	11,744	12,385
Less: Cash and Cash Equivalents	(3,399)	(2,873)
Net Debt	8,407	9,591
Net Earnings (Loss)	1,992	587
Add (Deduct):
Finance Costs	1,067	1,082
Interest Income	(34)	(23)
Income Tax Expense (Recovery)	1,197	728
Depreciation, Depletion and Amortization	5,871	5,886
Exploration Expense	28	18
Share of (Income) Loss From Equity-Accounted Affiliates	(47)	(57)
Unrealized (Gain) Loss on Risk Management	461	2
Foreign Exchange (Gain) Loss, Net	(159)	(174)
Re-measurement of Contingent Payment	624	575
(Gain) Loss on Divestitures of Assets	(459)	(229)
Other (Income) Loss, Net	(607)	(309)
Adjusted EBITDA (1)	9,934	8,086
Net Debt to Adjusted EBITDA	0.8x	1.2x

(1) Calculated on a trailing twelve-month basis.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

Net Debt to Adjusted Funds Flow

As at	March 31,<br>2022	December 31, 2021
Net Debt	8,407	9,591
Cash From (Used in) Operating Activities	7,056	5,919
(Add) Deduct:
Settlement of Decommissioning Liabilities	(110)	(102)
Net Change in Non-Cash Working Capital	(1,524)	(1,227)
Adjusted Funds Flow (1)	8,690	7,248
Net Debt to Adjusted Funds Flow	1.0x	1.3x

(1) Calculated on a trailing twelve-month basis.

Net Debt to Capitalization

As at	March 31,<br>2022		December 31, 2021
Net Debt	8,407		9,591
Shareholders’ Equity	24,614		23,596
Capitalization	33,021		33,187
Net Debt to Capitalization	25	%	29	%
18. LEASE LIABILITIES
---			Total
---	---
As at December 31, 2021	2,957
Additions	3
Interest Expense (Note 5)	42
Lease Payments	(117)
Modifications	28
Re-measurements	2
Terminations	(1)
Exchange Rate Movements and Other	(8)
As at March 31, 2022	2,906
Less: Current Portion	259
Long-Term Portion	2,647

The Company has lease liabilities for contracts related to office space, transportation and storage assets, which includes barges, vessels, pipelines, caverns, railcars and storage tanks, retail assets and other refining and field equipment. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

The Company has variable lease payments related to property taxes for real estate contracts. Short-term leases are leases with terms of twelve months or less.

The Company has included extension options in the calculation of lease liabilities where the Company has the right to extend a lease term at its discretion and is reasonably certain to exercise the extension option. The Company does not have any significant termination options and the residual amounts are not material.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

| 19. CONTINGENT PAYMENT | | --- || | Total | | --- | --- | | As at December 31, 2021 | 236 | | Re-measurement (1) | 236 | | Liabilities Settled or Payable | (294) | | As at March 31, 2022 | 178 |

(1) Contingent payment is carried at fair value. Changes in fair value are recorded in net earnings (loss).

On May 17, 2022, the contingent payment obligations associated with the acquisition from ConocoPhillips Company and certain of its subsidiaries will end and will be paid subsequent to June 30, 2022. As at March 31, 2022, $294 million was payable under this agreement (December 31, 2021 – $160 million).

20. DECOMMISSIONING LIABILITIES

The decommissioning provision represents the present value of the expected future costs associated with the retirement of producing well sites, upstream processing facilities, surface and subsea plant and equipment, manufacturing facilities, retail and the crude-by-rail terminal.

The aggregate carrying amount of the obligation is:

	Total
As at December 31, 2021	3,906
Liabilities Incurred	6
Liabilities Settled	(35)
Change in Discount Rate	(612)
Unwinding of Discount on Decommissioning Liabilities (Note 5)	44
Foreign Currency Translation	(5)
As at March 31, 2022	3,304

The undiscounted amount of estimated future cash flows required to settle the obligation has been discounted using a credit-adjusted risk-free rate of 5.4 percent as at March 31, 2022 (December 31, 2021 – 4.4 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 March 31, 2022, the Company had $188 million in restricted cash (December 31, 2021 – $186 million).

| 21. OTHER LIABILITIES | | --- || As at | March 31, 2022 | December 31, 2021 | | --- | --- | --- | | Pension and Other Post-Employment Benefit Plan | 250 | 288 | | Provision for West White Rose Expansion Project | 259 | 259 | | Provisions for Onerous and Unfavourable Contracts | 84 | 99 | | Employee Long-Term Incentives | 80 | 74 | | Drilling Provisions | 56 | 56 | | Deferred Revenue | 43 | 41 | | Other | 134 | 112 | | | 906 | 929 | | Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements | 25 | | --- | --- |

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

22. 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

	March 31, 2022		December 31, 2021
	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	2,001,211	17,016	1,228,870	11,040
Issued Under the Arrangement, Net of Issuance Costs	—	—	788,518	6,111
Issued Upon Exercise of Warrants	1,420	14	314	3
Issued Under Stock Option Plans	3,643	54	535	7
Purchase of Common Shares Under NCIB	(24,619)	(210)	(17,026)	(145)
Outstanding, End of Period	1,981,655	16,874	2,001,211	17,016

As at March 31, 2022, there were 35 million (December 31, 2021 – 30 million) common shares available for future issuance under the stock option plan.

C) Normal Course Issuer Bid

In the three months ended March 31, 2022, the Company purchased 25 million common shares through the NCIB (for the twelve months ended December 31, 2021 – 17 million common shares). The shares were purchased at a weighted average price of $18.91 per common share for a total of $466 million. Paid in surplus was reduced by $256 million, representing the excess of the purchase price of common shares over their average carrying value. The shares were subsequently cancelled. Subsequent to March 31, 2022, the Company purchased an additional 16 million shares for $354 million.

D) Issued and Outstanding – Preferred Shares

In the three months ended March 31, 2022, there were no additional preferred shares issued. As at March 31, 2022, there were 36 million preferred shares outstanding (December 31, 2021 – 36 million), with a value of $519 million (December 31, 2021 – $519 million).

As at March 31, 2022	Dividend Reset Date	Dividend Rate		Number of Preferred Shares (thousands)
Series 1 First Preferred Shares	March 31, 2026	2.58	%	10,740
Series 2 First Preferred Shares (1)	March 31, 2026	2.35	%	1,260
Series 3 First Preferred Shares	December 31, 2024	4.69	%	10,000
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 1.86 percent for the period from December 31, 2021, to March 30, 2022.

E) Issued and Outstanding – Warrants

As at March 31, 2022	Number of<br><br>Warrants<br><br>(thousands)	Amount
Outstanding, Beginning of Year	65,119	215
Exercised	(1,420)	(5)
Outstanding, End of Period	63,699	210
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	26
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

| 23. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | | --- || | Pension and Other Post-Employment Benefits | Private Equity Instruments | Foreign Currency Translation Adjustment | Total | | --- | --- | --- | --- | --- | | As at December 31, 2020 | (10) | 27 | 758 | 775 | | Other Comprehensive Income (Loss), Before Tax | 21 | — | (133) | (112) | | Income Tax (Expense) Recovery | (5) | — | — | (5) | | As at March 31, 2021 | 6 | 27 | 625 | 658 | | As at December 31, 2021 | 28 | 27 | 629 | 684 | | Other Comprehensive Income (Loss), Before Tax | 42 | — | (150) | (108) | | Income Tax (Expense) Recovery | (12) | — | — | (12) | | As at March 31, 2022 | 58 | 27 | 479 | 564 | | 24. STOCK-BASED COMPENSATION PLANS | | --- |

Cenovus has a number of stock-based compensation plans which include net settlement rights (“NSRs”), Cenovus replacement stock options, performance share units, restricted share units 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 March 31, 2022	(thousands)	(thousands)
Stock Options With Associated Net Settlement Rights	22,552	14,377
Cenovus Replacement Stock Options	8,359	6,799
Performance Share Units	8,832	—
Restricted Share Units	6,894	—
Deferred Share Units	1,604	1,604

The weighted average exercise price of NSRs and Cenovus replacement stock options outstanding as at March 31, 2022, was $12.58 and $14.34, respectively.

	Units<br><br>Granted	Units<br><br>Vested and<br><br>Exercised/<br><br>Paid Out
For the three months ended March 31, 2022	(thousands)	(thousands)
Stock Options With Associated Net Settlement Rights	1,980	3,604
Cenovus Replacement Stock Options	—	1,517
Performance Share Units	3,191	1,413
Restricted Share Units	3,122	2,207
Deferred Share Units	407	62

In the three months ended March 31, 2022, 3,580 thousand NSRs (see Note 22), with a weighted average exercise price of $12.07, were exercised and net settled for cash.

In the three months ended March 31, 2022, 23 thousand NSRs with a weighted average exercise price of $8.69, were exercised and net settled for 10 thousand common shares (see Note 22).

In the three months ended March 31, 2022, 68 thousand Cenovus replacement stock options were exercised with a weighted average exercise price of $20.60 and settled for 53 thousand common shares (see Note 22) and 1,449 thousand Cenovus replacement stock options, with a weighted average exercise price of $11.15, were exercised and net settled for cash.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

The following table summarizes the stock-based compensation expense (recovery) recorded for all plans:

For the three months ended March 31,	2022	2021
Stock Options With Associated Net Settlement Rights	4	5
Cenovus Replacement Stock Options	19	7
Performance Share Units	37	12
Restricted Share Units	37	6
Deferred Share Units	10	5
Stock-Based Compensation Expense (Recovery)	107	35
Stock-Based Compensation Costs Capitalized	—	1
Total Stock-Based Compensation	107	36
25. RELATED PARTY TRANSACTIONS
---

Transactions with HMLP are related party transactions as the Company has a 35 percent ownership interest (see Note 15). As the operator of the assets held by HMLP, Cenovus provides management services for which it recovers shared service costs.

The Company is also the contractor for HMLP and constructs its assets based on fixed price contracts or a cost recovery basis with certain restrictions. For the three months ended March 31, 2022, the Company charged HMLP $48 million for construction costs and management services (three months ended March 31, 2021 – $32 million).

The Company pays an access fee to HMLP for pipeline systems that are used by Cenovus’s blending business. Cenovus also pays HMLP for transportation and storage services. For the three months ended March 31, 2022, the Company incurred costs of $68 million for the use of HMLP’s pipeline systems, as well as transportation and storage services (three months ended March 31, 2021 – $72 million).

26. FINANCIAL INSTRUMENTS

Cenovus’s financial assets and financial liabilities consist of cash and cash equivalents, accounts receivable and accrued revenues, restricted cash, net investment in finance leases, accounts payable and accrued liabilities, risk management assets and liabilities, investments in the equity of companies, long-term receivables, lease liabilities, contingent payment, short-term borrowings, long-term debt and other liabilities. Risk management assets and liabilities arise from the use of derivative 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, long-term receivables and net investment in finance leases 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 borrowings has been determined based on period-end trading prices of long-term borrowings on the secondary market (Level 2). As at March 31, 2022, the carrying value of Cenovus’s long-term debt was $11.7 billion and the fair value was $12.1 billion (December 31, 2021, carrying value – $12.4 billion, fair value – $13.7 billion).

Equity investments classified as fair value through profit or loss (“FVTPL”) comprise equity investments in public companies. These assets are carried at fair value on the Consolidated Balance Sheets in other assets. Fair value is determined based on quoted prices in active markets (Level 1).

The Company classifies certain private equity investments as fair value through other comprehensive income (loss) (“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 on the Consolidated Balance Sheets in other assets. Fair value is determined based on recent private placement transactions (Level 3) when available.

The following table provides a reconciliation of changes in the fair value of private equity investments classified as FVOCI:

	Total
As at December 31, 2021	53
Change in Fair Value (1)	—
As at March 31, 2022	53

(1) Changes in fair value are recorded in OCI.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

B) Fair Value of Risk Management Assets and Liabilities

The Company’s risk management assets and liabilities consist of crude oil, natural gas and refined product swaps and futures, renewable energy contracts, and if entered into, forwards, options, as well as condensate futures and swaps, foreign exchange and interest rate swaps.

Crude oil, natural gas, condensate, and refined product 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 are calculated using external valuation models which incorporate observable market data, including foreign exchange forward curves (Level 2) and the fair value of interest rate swaps are calculated using external valuation models which incorporate observable market data, including interest rate yield curves (Level 2). The fair value of cross currency interest rate swaps are calculated using external valuation models which incorporate observable market data, including foreign exchange forward curves (Level 2) and interest rate yield curves (Level 2). The fair value of renewable energy contracts are calculated using internal valuation models which incorporate broker pricing for relevant markets, some observable market prices and extrapolated market prices with inflation assumptions (Level 3). The fair value of renewable energy contracts are calculated by Cenovus’s internal valuation team that consists of individuals who are knowledgeable and have experience in fair value techniques.

Risk management assets and liabilities are carried at fair value on the Consolidated Balance Sheets in accounts receivable and accrued revenues, and accounts payable and accrued liabilities (for short-term positions) and other liabilities (for long-term positions). Changes in fair value are recorded at FVTPL in the Consolidated Statement of Earnings within (gain) loss on risk management.

On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI. Given the strength of Cenovus’s balance sheet and liquidity position, the Company has determined these programs are no longer required to support financial resilience. The WTI contracts that were impacted by the announcement will be closed by June 30, 2022.

Summary of Unrealized Risk Management Positions

	March 31, 2022			December 31, 2021
	Risk Management			Risk Management
As at	Asset	Liability	Net	Asset	Liability	Net
Crude Oil, Natural Gas, Condensate and Refined Products (1)	16	378	(362)	46	116	(70)
Renewable Energy Contracts	—	20	(20)	—	—	—
Foreign Exchange Rate Contracts	3	—	3	2	—	2
	19	398	(379)	48	116	(68)

(1) On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI. As at March 31, 2022, the risk management liability related to the WTI contracts impacted by this announcement was $380 million.

Level 2 prices sourced from observable data or market corroboration refers to the fair value of contracts valued in part using active quotes and in part using observable, market-corroborated data. Level 3 prices are sourced from partially observable data used in internal valuations.

The following table presents the Company’s fair value hierarchy for risk management assets and liabilities carried at fair value:

As at	March 31, <br>2022	December 31, 2021
Level 2 – Prices Sourced From Observable Data or Market Corroboration	(359)	(68)
Level 3 – Prices Sourced From Partially Observable Data (1)	(20)	—
	(379)	(68)

(1) Includes renewable energy contracts with a fair value of $20 million as at March 31, 2022.

The following table provides a reconciliation of changes in the fair value of Cenovus’s risk management assets and liabilities from January 1 to March 31:

	2022
Fair Value of Contracts, Beginning of Year	(68)
Change in Fair Value of Contracts in Place at Beginning of Year and Contracts Entered Into During the Period	(1,285)
Fair Value of Contracts Realized During the Period	974
Fair Value of Contracts, End of Period	(379)
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	29
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

C) Fair Value of Contingent Payment

The contingent payment is carried at fair value on the Consolidated Balance Sheets. Fair value is estimated by calculating the present value of the expected future cash flows using an option pricing model (Level 3), which assumes the probability distribution for WCS is based on the volatility of WTI options, volatility of Canadian-U.S. foreign exchange rate options and both WTI and WCS futures pricing, and discounted at a credit-adjusted risk-free rate of 4.1 percent (December 31, 2021 – 2.9 percent). Fair value of the contingent payment has been calculated by Cenovus’s internal valuation team that consists of individuals who are knowledgeable and have experience in fair value techniques. As at March 31, 2022, the fair value of the contingent payment was estimated to be $178 million (December 31, 2021 – $236 million).

The contingent payment agreement ends on May 17, 2022. As at March 31, 2022, average WCS forward pricing over the remaining term is $109.19 per barrel. The average implied volatility of WTI options and the Canadian-U.S. dollar foreign exchange rate options used to value the contingent payment were 61.7 percent and 7.4 percent, respectively.

Changes in the following inputs to the option pricing model, with fluctuations in all other variables held constant, could have resulted in unrealized gains (losses) impacting earnings before income tax as follows:

As at March 31, 2022	Sensitivity Range	Increase	Decrease
WCS Forward Prices	± $5.00 per barrel	(16)	16

The impact of a five percent increase or decrease in WTI option price volatility and the Canadian-U.S. dollar foreign exchange rate options would result in nominal unrealized gains (losses) to earnings before income tax.

D) Earnings Impact of (Gains) Losses From Risk Management Positions

For the three months ended March 31,	2022	2021
Realized (Gain) Loss	974	342
Unrealized (Gain) Loss (1)	311	(148)
(Gain) Loss on Risk Management	1,285	194

(1) On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI. For the three months ended March 31, 2022, the unrealized risk management loss related to the WTI contracts impacted by this announcement was $370 million.

Realized and unrealized gains and losses on risk management are recorded in the reportable segment to which the derivative instrument relates.

27. RISK MANAGEMENT

Cenovus is exposed to financial risks, including market risk related to commodity prices, foreign exchange rates, interest rates as well as credit risk and liquidity risk.

To manage exposure to commodity price movements between when products are produced or purchased and when sold to the customer or used by Cenovus, the Company may periodically enter into financial positions as a part of ongoing operations to market the Company’s production and physical inventory positions of crude oil, condensate, refined products and natural gas volumes. The Company has entered into risk management positions to both help capture incremental margin expected to be received in future periods at the time products will be sold and to mitigate overall exposure to fluctuations in commodity prices related to inventories and physical sales. Mitigation of commodity price volatility may utilize financial positions to protect both near-term and future cash flows. To manage exposure to interest rate volatility, the Company may periodically enter into interest rate swap contracts. To mitigate the Company’s exposure to foreign exchange rate fluctuations, the Company periodically enters into foreign exchange contracts. To manage interest costs on short-term borrowings, the Company periodically enters into cross currency interest rate swaps. To manage electricity costs associated with the production and transportation of crude oil, the Company may enter into energy instruments, including renewable energy contracts. To manage exposure to carbon costs, the Company may enter into carbon credit instruments, which may be embedded in renewable energy contracts or may be entered into separately.

As at March 31, 2022, the fair value of financial positions was a net liability of $379 million and consisted of crude oil, condensate, natural gas, renewable energy and foreign exchange rate instruments. As at March 31, 2022, there were foreign exchange contracts with a notional value of US$207 million outstanding and no interest rate contracts or cross currency interest rate swap contracts outstanding.

On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

Net Fair Value of Risk Management Positions

As at March 31, 2022	Notional<br><br>Volumes (1) (2)	Terms (3)	Weighted<br><br>Average<br><br>Price (1) (2)	Fair Value Asset (Liability)
Crude Oil Sales Price Related WTI (4)
WTI Fixed – Sell	27.0 MMbbls	April 2022 - June 2022 (4)	US$86.31/bbl	(436)
WTI Fixed – Buy	15.4 MMbbls	April 2022 - June 2022 (4)	US$96.60/bbl	56
WTI Fixed – Sell	14.9 MMbbls	July 2022 - December 2024 (4)	US$84.35/bbl	(153)
WTI Fixed – Buy	9.8 MMbbls	July 2022 - December 2024 (4)	US$78.26/bbl	153
Other WTI (5)
WTI Fixed – Sell	6.5 MMbbls	April 2022 - December 2022	US$103.37/bbl	28
WTI Fixed – Buy	3.0 MMbbls	April 2022 - December 2022	US$108.14/bbl	(32)
Other Financial Positions (6)				2
Foreign Exchange Rate Contracts				3
Total Fair Value				(379)

(1) Million barrels (“MMbbls”). Barrel (“bbl”).

(2) Notional volumes and weighted average price represent various contracts over the respective terms. The notional volumes and weighted average price may fluctuate from month to month as it represents the averages for various individual contracts with different terms.

(3) Contract terms represent various individual contracts with different terms, and range from one to 33 months.

(4) On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI. The terms noted above are as at March 31, 2022. Contracts with terms between April 2022 and June 2022, are expected to naturally decay. Contracts with terms between July 2022 and December 2024, started to be liquidated in April 2022 and will be closed by June 30, 2022.

(5) Other WTI positions consist of WTI contracts to help manage condensate price exposure as well as feedstock costs and refined products price exposure.

(6) Other financial positions consists of risk management positions related to WCS, heavy oil and condensate differential contracts, Belvieu fixed price contracts, reformulated blendstock for oxygenate blending gasoline contracts, heating oil and natural gas fixed price contracts, renewable energy contracts and the Company’s U.S. manufacturing and marketing activities.

A) Commodity Price, Interest Rate and Foreign Currency 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 March 31, 2022	Sensitivity Range	Increase	Decrease
Crude Oil Commodity Price(1)	± US$5.00/bbl Applied to WTI, Condensate and Related Hedges	(114)	114
WCS and Condensate Differential Price	± US$2.50/bbl Applied to WCS and Differential Hedges Tied to Production	(10)	10
Refined Products Commodity Price	± US$5.00/bbl Applied to Heating Oil and Gasoline Hedges	(5)	5
Power Commodity Price	± C$20.00/MWH Applied to Renewable Energy Contracts	34	(34)
U.S. to Canadian Dollar Exchange Rate	± 0.05 in the U.S. to Canadian Dollar Exchange Rate	15	(17)

(1) On April 4, 2022, Cenovus announced the suspension of its crude oil sales price risk management activities related to WTI. At March 31, 2022, the increase/ decrease associated with the sensitivity range tied to the WTI contracts affected by this announcement was $105 million.

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 has in place a Credit Policy approved by the Audit Committee and the Board of Directors designed to ensure that its credit exposures are within an acceptable risk level. The Credit Policy outlines the roles and responsibilities related to credit risk, sets a framework for how credit exposures will be measured, monitored and mitigated, and sets parameters around credit concentration limits.

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. Cenovus’s exposure to its counterparties is within credit policy tolerances. The maximum credit risk exposure associated with accounts receivable and accrued revenues, net investment in finance leases, risk management assets and long-term receivables is the total carrying value.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

As at March 31, 2022, approximately 96 percent of the Company’s accruals, receivables related to Cenovus’s joint ventures and joint operations, trade receivables and net investment in finance leases were investment grade, and 100 percent of the Company’s accounts receivable were outstanding for less than 60 days. The associated average expected credit loss on these accounts was 0.1 percent as at March 31, 2022 (December 31, 2021 – 0.1 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. Cenovus manages its liquidity risk through the active management of cash and debt and by maintaining appropriate access to credit, which may be impacted by the Company’s credit ratings. As disclosed in Note 17, over the long term, Cenovus targets a Net Debt to Adjusted EBITDA ratio of approximately 1.0 times to manage the Company’s overall debt position.

Undiscounted cash outflows relating to financial liabilities are:

As at March 31, 2022	Less than 1 Year	Years 2 and 3	Years 4 and 5	Thereafter	Total
Accounts Payable and Accrued Liabilities	8,122	—	—	—	8,122
Short-Term Borrowings (1)	62	—	—	—	62
Long-Term Debt (1)	541	1,832	2,543	13,874	18,790
Contingent Payment	178	—	—	—	178
Lease Liabilities (1)	445	780	620	3,122	4,967
As at December 31, 2021	Less than 1 Year	Years 2 and 3	Years 4 and 5	Thereafter	Total
Accounts Payable and Accrued Liabilities	6,353	—	—	—	6,353
Short-Term Borrowings (1)	79	—	—	—	79
Long-Term Debt (1)	561	1,608	2,603	14,892	19,664
Contingent Payment	238	—	—	—	238
Lease Liabilities (1)	453	794	634	3,192	5,073

(1) Principal and interest, including current portion if applicable.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

28. SUPPLEMENTARY CASH FLOW INFORMATION

A) Working Capital

	March 31,<br>2022	December 31,<br>2021
Total Current Assets	14,584	11,988
Total Current Liabilities	9,140	7,305
Working Capital	5,444	4,683

As at March 31, 2022, adjusted working capital was $5.2 billion (December 31, 2021 – $3.8 billion), excluding assets held for sale of $530 million (December 31, 2021 – $1.3 billion), the current portion of the contingent payment of $178 million (December 31, 2021 – $236 million) and liabilities related to assets held for sale of $128 million (December 31, 2021 – $186 million).

Changes in non-cash working capital is as follows:

For the three months ended March 31,	2022	2021
Accounts Receivable and Accrued Revenues	(1,909)	(653)
Income Tax Receivable	15	9
Inventories	(805)	(608)
Accounts Payable and Accrued Liabilities	1,547	403
Income Tax Payable	212	(42)
Total Non-Cash Working Capital	(940)	(891)
Net Change in Non-Cash Working Capital - Operating Activities	(1,199)	(902)
Net Change in Non-Cash Working Capital - Investing Activities	259	11
Total Non-Cash Working Capital	(940)	(891)
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	33
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

B) Reconciliation of Liabilities

The following table provides a reconciliation of liabilities to cash flows arising from financing activities:

	Dividends Payable	Short-Term Borrowings	Long-Term Debt	Lease Liabilities
As at December 31, 2020	—	121	7,441	1,757
Acquisition	—	40	6,602	1,441
Changes From Financing Cash Flows:
Net Issuance (Repayment) of Short-Term Borrowings	—	107	—	—
Net Issuance (Repayment) of Revolving Long-Term Debt	—	—	50	—
Principal Repayment of Leases	—	—	—	(75)
Common Share Dividends Paid	(35)	—	—	—
Preferred Share Dividend Paid	(9)	—	—	—
Non-Cash Changes:
Exchange Rate Movements and Other	—	(2)	(130)	(10)
Finance Costs	—	—	(16)	—
Lease Additions	—	—	—	54
Lease Modifications	—	—	—	7
Lease Re-measurements	—	—	—	(2)
Common Share Dividends Declared	35	—	—	—
Preferred Share Dividends Declared	9	—	—	—
As at March 31, 2021	—	266	13,947	3,172
As at December 31, 2021	—	79	12,385	2,957
Changes From Financing Cash Flows:
Net Issuance (Repayment) of Short-Term Borrowings	—	(16)	—	—
(Repayment) of Long-Term Debt	—	—	(510)	—
Net Issuance (Repayment) of Revolving Long-Term Debt	—	—	—	—
Principal Repayment of Leases	—	—	—	(75)
Common Share Dividends Paid	(69)	—	—	—
Preferred Share Dividends Paid	(9)	—	—	—
Non-Cash Changes:
Exchange Rate Movements and Other	—	(1)	(128)	(8)
Net Premium (Discount) on Redemption of Long-Term<br> Debt	—	—	7
Finance Costs	—	—	(10)	—
Lease Additions	—	—	—	3
Lease Modifications	—	—	—	28
Lease Re-measurements	—	—	—	2
Lease Terminations	—	—	—	(1)
Common Share Dividends Declared	69	—	—	—
Preferred Share Dividends Declared	9	—	—	—
As at March 31, 2022	—	62	11,744	2,906
Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	34
---	---

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended March 31, 2022

29. COMMITMENTS AND CONTINGENCIES

A) Commitments

Cenovus has entered into various commitments in the normal course of operations primarily related to demand charges on firm transportation agreements. In addition, the Company has commitments related to its risk management program.

Future payments for the Company’s commitments are below:

As at March 31, 2022	Remainder of Year	2 Years	3 Years	4 Years	5 Years	Thereafter	Total
Transportation and Storage (1)	2,731	3,286	3,381	2,394	2,297	18,469	32,558
Real Estate (2)	35	45	52	54	58	658	902
Obligation to Fund Equity-Accounted Affiliate (3)	54	84	97	89	89	207	620
Other Long-Term Commitments	422	167	151	142	154	1,212	2,248
Total Payments (4)	3,242	3,582	3,681	2,679	2,598	20,546	36,328

(1) Includes transportation commitments of $9.1 billion (December 31, 2021 – $8.1 billion) that are subject to regulatory approval or have been approved, but are not yet in service. Terms are up to 20 years subsequent to the date of commencement.

(2) Relates to the non-lease components of lease liabilities consisting of operating costs and unreserved parking for office space. Excludes committed payments for which a provision has been provided.

(3) Relates to funding obligations for HCML.

(4) Commitments are reflected at Cenovus’s proportionate share of the underlying contract.

As at March 31, 2022, the Company had commitments with HMLP that include $2.6 billion related to long-term transportation and storage commitments (December 31, 2021 – $2.6 billion). There were also outstanding letters of credit aggregating to $543 million (December 31, 2021 – $565 million) issued as security for financial and performance conditions under certain contracts.

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 Consolidated Financial Statements.

Decommissioning Liabilities

Cenovus is responsible for the retirement of long-lived assets at the end of their useful lives. Cenovus has recorded a liability of $3.3 billion, based on current legislation and estimated costs, related to its producing well sites, upstream processing facilities, surface and subsea plant and equipment, manufacturing facilities, retail and the crude-by-rail terminal. Actual costs may differ from those estimated due to changes in legislation and changes in costs.

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.

Cenovus Energy Inc. – Q1 2022 Interim Consolidated Financial Statements	35

Document

Exhibit 99.4

CENOVUS ENERGY INC.

Supplemental Financial Information (unaudited)

Exhibit to the March 31, 2022 Interim Consolidated Financial Statements

Consolidated Interest Coverage Ratios

The following financial ratios are provided by Cenovus Energy Inc. (the “Company”) in connection with the offering of common shares, debt securities, preferred shares, subscription receipts, warrants, share purchase contracts and/or units of the Company by way of base shelf prospectus dated October 7, 2021. These ratios are based on the Company's consolidated financial statements that are prepared in accordance with International Financial Reporting Standards, which are generally accepted in Canada.

Interest coverage ratios for the twelve months ended March 31, 2022

	(times)
Net earnings available for all interest bearing financial liabilities (1)	4.5x
Net earnings available for all interest bearing financial liabilities before unrealized (gains) and losses on risk management activities (2)	5.0x

(1)Calculated as net earnings plus income tax and borrowing costs on all interest bearing financial liabilities; divided by borrowing costs on all interest bearing financial liabilities, as well as declared and undeclared cumulative preferred share dividends.

(2)Calculated as net earnings plus income tax and borrowing costs on all interest bearing financial liabilities before unrealized (gains) and losses on risk management activities; divided by borrowing costs on all interest bearing financial liabilities, as well as declared and undeclared cumulative preferred share dividends.

The Company believes the interest coverage ratio based on net earnings available for all interest bearing financial liabilities before unrealized (gains) and losses on risk management activities is a relevant measure for investors as the realization of unrealized (gains) and losses are yet to be determined and will be realized in future periods.

Document

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Alex J. Pourbaix, President & Chief Executive Officer of Cenovus Energy Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Cenovus Energy Inc. (the “issuer”) for the interim period ended March 31, 2022.

2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4.Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii)information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework in Internal Control – Integrated Framework.

5.2 ICFR - material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2022 and ended on March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: April 27, 2022

/s/ Alex J. Pourbaix

Alex J. Pourbaix

President & Chief Executive Officer

Document

Exhibit 99.6

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Jeffrey R. Hart, Executive Vice-President & Chief Financial Officer of Cenovus Energy Inc., certify the following:

1.Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Cenovus Energy Inc. (the “issuer”) for the interim period ended March 31, 2022.

5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

5.2 ICFR - material weakness relating to design: N/A

5.3 Limitation on scope of design: N/A

Date: April 27, 2022

/s/ Jeffrey R. Hart

Jeffrey R. Hart

Executive Vice-President & Chief Financial Officer