Cenovus Energy Inc 6-K, filed May 6, 2026
Cenovus Energy Inc. (CVE)
6-K
2026-05-06
For: 2026-03-31
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Added on
May 06, 2026
About this 6-K
Cenovus Energy Inc filed this 6-K on May 6, 2026.
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 May 2026
Commission File Number: 1-34513
CENOVUS ENERGY INC.
(Translation of registrant’s name into English)
4100, 225 6 Avenue S.W.
Calgary, Alberta, Canada T2P 1N2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
DOCUMENTS FILED AS PART OF THIS FORM 6-K
See the Exhibit Index to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 6, 2026
CENOVUS ENERGY INC. | |||||||||||||||||
(Registrant) | |||||||||||||||||
By: | /s/ Amanda D. Pankiw | |||||||||||||||||||||||||
Name: | Amanda D. Pankiw | |||||||||||||||||||||||||
Title: | Assistant Corporate Secretary | |||||||||||||||||||||||||
Form 6-K Exhibit Index
Exhibit No. | ||||||||
News Release dated May 6, 2026 | ||||||||
Management's Discussion and Analysis dated May 5, 2026 for the period ended March 31, 2026 | ||||||||
Interim Consolidated Financial Statement (unaudited) for the period ended March 31, 2026 | ||||||||
| Form 52-109F2 Full Certificate, dated May 6, 2026, of Jonathan M. McKenzie, President & Chief Executive Officer | ||||||||
| Form 52-109F2 Full Certificate, dated May 6, 2026, of Karamjit S. Sandhar, Executive Vice-President & Chief Financial Officer | ||||||||
Exhibit 99.1 | ||||||||
| News release |  | |||||||
Cenovus announces first-quarter 2026 results
Calgary, Alberta (May 6, 2026) – Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) today announced its first-quarter 2026 financial and operating results. In the quarter, the company generated approximately $3.4 billion of adjusted funds flow and $2.2 billion of free funds flow. Operating results in the quarter included Upstream production of 972,100 barrels of oil equivalent per day (BOE/d)1 and Downstream crude throughput of 458,500 barrels per day (bbls/d), representing an overall crude unit utilization rate of 97%.
The Board of Directors has approved a 10% increase in the quarterly base dividend to $0.22 per share, beginning in the second quarter of 2026. Consistent with Cenovus’s financial framework, the base dividend is underpinned by its growth plan and resilience at a US$45 West Texas Intermediate crude oil price.
Highlights
•Reached highest ever quarterly Upstream production of 972,100 BOE/d, an increase of 54,200 BOE/d or 6% from Q4 2025 and 153,200 BOE/d or 19% from Q1 2025.
•Accelerated the redevelopment well program at Christina Lake North. The first of 40 redevelopment wells was drilled in March with first oil processed in April.
•Increased Offshore production to 75,400 BOE/d in Q1 2026, an increase of 4,500 BOE/d or 6% from Q4 2025. With the West White Rose project now complete and drilling operations underway, first oil is expected in Q3 2026.
•Achieved a Downstream utilization rate of 97%, with crude throughput of 458,500 bbls/d. U.S. Refining adjusted market capture2 of 114% contributed to total Downstream operating margin3 of $734 million, including a $457 million inventory holding gain.
•Returned $1.0 billion to shareholders in the first quarter, including $379 million through common and preferred share dividends, $356 million through common share repurchases and $300 million in preferred share redemptions.
“Our people continued to deliver exceptional operating and financial results. From record Upstream production to seamless project execution and robust Downstream performance, the entire suite of integrated assets contributed to a terrific quarterly result,” said Jon McKenzie, Cenovus President & Chief Executive Officer. “Our focus remains squarely on safety and disciplined execution of our ambitious business plan.”
Financial summary
($ millions, except per share amounts) | 2026 Q1 | 2025 Q4 | 2025 Q1 | ||||||||||||||||||||
| Cash from (used in) operating activities | 2,181 | 2,408 | 1,315 | ||||||||||||||||||||
Adjusted funds flow2 | 3,377 | 2,674 | 2,212 | ||||||||||||||||||||
Per share (diluted)2 | 1.80 | 1.46 | 1.21 | ||||||||||||||||||||
| Capital investment | 1,170 | 1,360 | 1,229 | ||||||||||||||||||||
Free funds flow2 | 2,207 | 1,314 | 983 | ||||||||||||||||||||
Excess free funds flow2 | 1,723 | (1,597) | 373 | ||||||||||||||||||||
| Net earnings (loss) | 1,570 | 934 | 859 | ||||||||||||||||||||
| Per share (diluted) | 0.83 | 0.50 | 0.47 | ||||||||||||||||||||
| Long-term debt, including current portion | 10,633 | 11,032 | 7,524 | ||||||||||||||||||||
| Net debt | 8,058 | 8,292 | 5,079 | ||||||||||||||||||||
CENOVUS ENERGY NEWS RELEASE | 1
Production and throughput
(before royalties, net to Cenovus) | 2026 Q1 | 2025 Q4 | 2025 Q1 | ||||||||||||||||||||
Oil and NGLs (bbls/d)1 | 830,100 | 774,500 | 670,900 | ||||||||||||||||||||
Conventional natural gas (MMcf/d)1 | 852.0 | 860.4 | 887.9 | ||||||||||||||||||||
Total Upstream production (BOE/d)1 | 972,100 | 917,900 | 818,900 | ||||||||||||||||||||
Total Downstream crude throughput (bbls/d)1 | 458,500 | 465,500 | 665,400 | ||||||||||||||||||||
1 See Advisory for production by product type and by reporting segment.
2 Non-GAAP financial measure or contains a non-GAAP financial measure. See Advisory.
3Specified financial measure. See Advisory.
First-quarter results
Operating1
Cenovus’s total revenues were $12.4 billion in the first quarter, up from $10.9 billion in the fourth quarter of 2025. Upstream revenues were $9.4 billion, an increase from $7.6 billion in the prior quarter, while Downstream revenues were $5.6 billion, an increase from $5.3 billion in the prior quarter.
Total operating margin4 was $4.4 billion, compared with $2.8 billion in the prior quarter. Upstream operating margin5 was $3.7 billion, up from $2.6 billion in the prior quarter, as a result of higher benchmark oil prices and increased production. Downstream operating margin was $734 million, an increase from $149 million in the prior quarter, reflecting increased refined product prices and strong seasonal market capture. Operating margin in the U.S. Refining segment was $533 million, which included a $457 million inventory holding gain.
Total Upstream production was 972,100 BOE/d in the first quarter, up from 917,900 BOE/d in the fourth quarter of 2025. Christina Lake production was 358,900 bbls/d compared with 308,900 bbls/d in the prior quarter, as a result of the acquisition of MEG Energy Corp. (MEG) and strong well pad performance at Narrows Lake. Foster Creek production was 223,000 bbls/d, up from 220,100 bbls/d in the prior quarter, and Sunrise production was 59,400 bbls/d, similar to the fourth quarter.
Production from the Lloydminster thermal assets was 102,300 bbls/d compared with 106,900 bbls/d in the fourth quarter of 2025, reflecting the disposition of Vawn in December. Lloydminster conventional heavy oil output was 29,000 bbls/d, compared with 28,100 bbls/d in the prior quarter.
Production in the Conventional segment was 121,700 BOE/d, an increase from 120,400 BOE/d in the prior quarter.
In the Offshore segment, production was 75,400 BOE/d compared with 70,900 BOE/d in the fourth quarter of 2025. In Asia Pacific, production was 57,100 BOE/d, compared with 54,000 BOE/d in the prior quarter, and in the Atlantic region production was 18,300 bbls/d, up from 16,900 bbls/d in the prior quarter.
Total Downstream crude throughput in the first quarter was 458,500 bbls/d. Crude throughput in Canadian Refining was 115,300 bbls/d, representing a utilization rate of 107%, compared with 112,900 bbls/d in the prior quarter.
In U.S. Refining, crude throughput was 343,200 bbls/d, compared with 352,600 bbls/d in the fourth quarter of 2025. First-quarter crude throughput represents a crude unit utilization rate of 94%. U.S. Refining revenues were $4.2 billion, in line with the prior quarter. Adjusted market capture in U.S.
CENOVUS ENERGY NEWS RELEASE | 2
Refining was 114%, compared with 106% in the prior quarter, as a result of strong distillate cracks, widening heavy crude differentials and favourable secondary product pricing.
4Non-GAAP financial measure. Total operating margin is the total of Upstream operating margin plus Downstream operating margin. See Advisory.
5Specified financial measure. See Advisory.
Financial
Cash from operating activities in the first quarter declined to approximately $2.2 billion from $2.4 billion in the fourth quarter of 2025. Adjusted funds flow was $3.4 billion, compared with $2.7 billion in the prior quarter, and excess free funds flow was $1.7 billion, compared with a shortfall of $1.6 billion in the prior quarter as a result of the completion of the MEG acquisition. Net earnings increased to $1.6 billion from $934 million in the prior quarter. First-quarter financial results were driven by increases in benchmark crude oil prices, Upstream production and refined product pricing.
Long-term debt, including the current portion, was $10.6 billion as at March 31, 2026. Net debt was $8.1 billion as at March 31, 2026, a modest decrease from the prior quarter, as a result of strong financial results, partially offset by the redemption of all $300 million of Cenovus’s Series 1 and Series 2 preferred shares on March 31, 2026, and a $1.1 billion increase in non-cash working capital. The company continues to steward toward a long-term net debt target of $4.0 billion.
Growth projects
The Christina Lake North expansion project, which will increase production volumes by approximately 40,000 bbls/d by 2028, continued to progress in the first quarter. Production from the 40-well redevelopment program is expected to ramp up in the second half of 2026 and installation of the first new steam generator is ahead of schedule and expected to be brought online before year-end. At Foster Creek, the Amine Claus project was mechanically complete within the quarter and commissioning work is underway. At Sunrise, the first of four new well pads on the east development area began producing in April. A second pad is expected to come online later in 2026 as production continues to ramp up towards 70,000 bbls/d by 2028.
At West White Rose, commissioning and testing of the platform was completed, and drilling operations have commenced. First oil is now anticipated in the third quarter of 2026.
Sale of Canadian commercial fuels business
Cenovus entered into agreements to sell its Canadian commercial fuels business, which includes travel centres, cardlocks, retail sites and bulk plants. Total expected cash proceeds from the sales are $275 million. The transactions are expected to close in the second half of 2026, subject to approval under the Competition Act (Canada) and other customary closing conditions. TD Securities acted as exclusive financial advisor on the transactions.
Sustainability
Today, Cenovus released its 2025 Corporate Social Responsibility report, illustrating the company’s progress and performance related to safety, Indigenous reconciliation, and acceptance and belonging as well as its approach to governance. The report is available on the company's website at cenovus.com.
The report highlights how Cenovus advanced several major initiatives that strengthened competitiveness in 2025 and continued to position the company for long-term success, supporting both business performance and sustainability efforts. Cenovus delivered top-quartile process safety
CENOVUS ENERGY NEWS RELEASE | 3
performance, reached a record $860 million in Indigenous business spend in 2025 and refreshed its social commitments with clear, measurable ambitions and defined strategic actions.
The company is actively engaged with the governments of Alberta and Canada in 2026 to advance the shared goals of expanding the energy sector, increasing and diversifying market access and reducing emissions while maintaining global competitiveness for the oil sands industry.
“We have an unprecedented opportunity to produce more oil to meet global demand, and by doing so we will strengthen Canada’s economy,” McKenzie said. “Now is the time to create the conditions so industry can be globally competitive and Canada can take advantage of this moment.”
Dividend declarations and share purchases
The Board of Directors has declared a quarterly base dividend of $0.22 per common share, payable on June 30, 2026, to shareholders of record as of June 15, 2026.
All dividends paid on Cenovus’s common shares will be designated as “eligible dividends” for Canadian federal income tax purposes. Declaration of dividends is at the sole discretion of the Board and will continue to be evaluated on a quarterly basis.
In the first quarter, the company returned $1.0 billion to shareholders, composed of $356 million from its purchase of 11.5 million common shares through its normal course issuer bid, $379 million through common and preferred share dividends and $300 million through the redemption of Cenovus’s Series 1 and Series 2 preferred shares. With the redemptions, Cenovus no longer has preferred shares within its capital structure.
2026 planned maintenance
The following table provides details on planned maintenance activities at Cenovus assets in 2026 and anticipated production or throughput impacts.
Potential quarterly production/throughput impact (Mbbls/d or MBOE/d)
| (MBOE/d or Mbbls/d) | Q2 | Q3 | Q4 | Annual impact | ||||||||||
| Upstream | ||||||||||||||
Oil Sands | 5 - 9 | 23 - 28 | 2 - 4 | 8 - 10 | ||||||||||
| Offshore | - | - | - | - | ||||||||||
| Conventional | - | - | - | - | ||||||||||
| Downstream | ||||||||||||||
Canadian Refining | 10 - 15 | - | - | 2 - 4 | ||||||||||
| U.S. Refining | - | 35 - 45 | 40 - 50 | 20 - 26 | ||||||||||
Conference call today
Cenovus will host a conference call today, May 6, 2026, starting at 9 a.m. MT (11 a.m. ET).
For analysts wanting to join the call, please register in advance.
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To participate in the conference call, complete the online registration form in advance of the call start time. Once registered, you will receive a unique PIN to access the call by phone. You can either dial into the conference call using the unique PIN or select the "Call Me" option to receive an automated call.
A live audio webcast of the conference call will also be available and will remain archived for approximately 30 days.
Cenovus will also host its Annual Meeting of Shareholders today, May 6, 2026, in a virtual format beginning at 11 a.m. MT (1 p.m. ET). The webcast link to the Shareholders Meeting is available under Shareholder information 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 as issued by the International Accounting Standards Board (the IFRS Accounting Standards).
Barrels of Oil Equivalent
Natural gas volumes have been converted to 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.
Product types
Product type by reporting segment | Three months ended March 31, 2026 | |||||||
| Oil Sands | ||||||||
| Bitumen (Mbbls/d) | 743.6 | |||||||
| Heavy crude oil (Mbbls/d) | 29.0 | |||||||
| Conventional natural gas (MMcf/d) | 14.4 | |||||||
| Total Oil Sands segment production (MBOE/d) | 775.0 | |||||||
| Conventional | ||||||||
| Light crude oil (Mbbls/d) | 6.0 | |||||||
| Natural gas liquids (Mbbls/d) | 22.9 | |||||||
| Conventional natural gas (MMcf/d) | 556.4 | |||||||
| Total Conventional segment production (MBOE/d) | 121.7 | |||||||
| Offshore | ||||||||
| Light crude oil (Mbbls/d) | 18.3 | |||||||
| Natural gas liquids (Mbbls/d) | 10.3 | |||||||
| Conventional natural gas (MMcf/d) | 281.2 | |||||||
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| Total Offshore segment production (MBOE/d) | 75.4 | |||||||
| Total Upstream production (MBOE/d) | 972.1 | |||||||
Forward‐looking Information
This news release contains certain forward‐looking statements and forward‐looking information (collectively referred to as “forward‐looking information”) within the meaning of applicable securities legislation about Cenovus’s current expectations, estimates and projections about the future of the company, based on certain assumptions made in light of the company’s experiences and perceptions of historical trends. Although Cenovus believes that the expectations represented by such forward‐looking information are reasonable, there can be no assurance that such expectations will prove to be correct.
Forward‐looking information in this document is identified by words such as “anticipate”, “continue”, “deliver”, “expect”, “payable”, “plan”, “progress”, “steward”, and “will” or similar expressions and includes suggestions of future outcomes, including, but not limited to, statements about: focus on safety and disciplined execution of our business plan; stewarding towards our long-term net debt target; progressing the Foster Creek Amine Claus project; Christina Lake North expansion project progress; ramp-up of production growth at Sunrise; timing of first oil from the West White Rose project; timing of closing of and expected proceeds from the sale of the Canadian commercial fuels business; 2026 planned maintenance and production/throughput impacts; and future dividend payments.
Developing forward‐looking information involves reliance on a number of assumptions and consideration of certain risks and uncertainties, some of which are specific to Cenovus and others that apply to the industry generally. The factors or assumptions on which the forward‐looking information in this news release are based include, but are not limited to the assumptions inherent in Cenovus’s 2026 corporate guidance available on cenovus.com.
The risk factors and uncertainties that could cause actual results to differ materially from the forward‐looking information in this news release include, but are not limited to: changes to general economic, market and business conditions; the accuracy of estimates regarding commodity production and operating expenses, inflation, taxes, royalties, capital costs and currency and interest rates; risks inherent in the operation of Cenovus’s business; and risks associated with climate change and Cenovus’s assumptions relating thereto and other risks identified under “Risk Management and Risk Factors” and “Advisory” in Cenovus’s Management’s Discussion and Analysis (MD&A) for the year ended December 31, 2025.
Except as required by applicable securities laws, Cenovus disclaims any intention or obligation to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that the foregoing lists are not exhaustive and are made as at the date hereof. Events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward‐looking information. For additional information regarding Cenovus’s material risk factors, the assumptions made, and risks and uncertainties which could cause actual results to differ from the anticipated results, refer to “Risk Management and Risk Factors” and “Advisory” in Cenovus’s MD&A for the periods ended December 31, 2025 and March 31, 2026 and to the risk factors, assumptions and uncertainties described in other documents Cenovus files from time to time with securities regulatory authorities in Canada (available on SEDAR+ at sedarplus.ca, on EDGAR at sec.gov and Cenovus’s website at cenovus.com).
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Specified Financial Measures
This news release contains references to certain specified financial measures that do not have standardized meanings prescribed by IFRS Accounting Standards. Readers should not consider these measures in isolation or as a substitute for analysis of the company’s results as reported under IFRS Accounting Standards. These measures are defined differently by different companies and, therefore, might not be comparable to similar measures presented by other issuers. For information on the composition of these measures, as well as an explanation of how the company uses these measures, refer to the Specified Financial Measures Advisory located in Cenovus’s MD&A for the periods ended December 31, 2025 and March 31, 2026 (available on SEDAR+ at sedarplus.ca, on EDGAR at sec.gov and on Cenovus's website at cenovus.com), which is incorporated by reference into this news release.
Upstream Operating Margin and Downstream Operating Margin
Upstream Operating Margin and Downstream Operating Margin, and the individual components thereof, are included in Note 1 of the interim Consolidated Financial Statements.
Total Operating Margin
Total Operating Margin is the total of Upstream Operating Margin plus Downstream Operating Margin.
Upstream (6) | Downstream (6) | Total | |||||||||||||||||||||||||||
| ($ millions) | Q1 2026 | Q4 2025 | Q1 2025 | Q1 2026 | Q4 2025 | Q1 2025 | Q1 2026 | Q4 2025 | Q1 2025 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Gross Sales | 10,370 | 8,287 | 9,252 | 5,627 | 5,314 | 7,705 | 15,997 | 13,601 | 16,957 | ||||||||||||||||||||
| Less: Royalties | (983) | (670) | (906) | — | — | — | (983) | (670) | (906) | ||||||||||||||||||||
| 9,387 | 7,617 | 8,346 | 5,627 | 5,314 | 7,705 | 15,014 | 12,931 | 16,051 | |||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Purchased Product | 1,244 | 1,271 | 1,167 | 4,378 | 4,574 | 7,082 | 5,622 | 5,845 | 8,249 | ||||||||||||||||||||
| Transportation and Blending | 3,375 | 2,832 | 3,247 | — | — | — | 3,375 | 2,832 | 3,247 | ||||||||||||||||||||
| Operating | 1,047 | 893 | 893 | 526 | 591 | 854 | 1,573 | 1,484 | 1,747 | ||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 13 | (7) | (9) | (11) | — | 6 | 2 | (7) | (3) | ||||||||||||||||||||
| Operating Margin | 3,708 | 2,628 | 3,048 | 734 | 149 | (237) | 4,442 | 2,777 | 2,811 | ||||||||||||||||||||
6 Found in Note 1 of the March 31, 2026, or the December 31, 2025, interim Consolidated Financial Statements.
Adjusted Funds Flow, Free Funds Flow and Excess Free Funds Flow
The following table provides a reconciliation of cash from (used in) operating activities found in Cenovus’s interim Consolidated Financial Statements to Adjusted Funds Flow, Free Funds Flow and Excess Free Funds Flow. Adjusted Funds Flow per Share – Basic and Adjusted Funds Flow per Share – Diluted are calculated by dividing Adjusted Funds Flow by the respective basic or diluted weighted average number of common shares outstanding during the period and may be useful to evaluate a company’s ability to generate cash.
CENOVUS ENERGY NEWS RELEASE | 7
| Three Months Ended | |||||||||||||||||
| ($ millions) | March 31, 2026 | December 31, 2025 | March 31, 2025 | ||||||||||||||
Cash From (Used in) Operating Activities (7) | 2,181 | 2,408 | 1,315 | ||||||||||||||
| (Add) Deduct: | |||||||||||||||||
| Settlement of Decommissioning Liabilities | (53) | (82) | (36) | ||||||||||||||
| Net Change in Non-Cash Working Capital | (1,143) | (184) | (861) | ||||||||||||||
| Adjusted Funds Flow | 3,377 | 2,674 | 2,212 | ||||||||||||||
| Capital Investment | 1,170 | 1,360 | 1,229 | ||||||||||||||
| Free Funds Flow | 2,207 | 1,314 | 983 | ||||||||||||||
| Add (Deduct): | |||||||||||||||||
| Base Dividends Paid on Common Shares | (377) | (376) | (327) | ||||||||||||||
| Purchase of Common Shares under Employee Benefit Plan | (51) | (61) | (58) | ||||||||||||||
| Dividends Paid on Preferred Shares | (2) | (4) | (6) | ||||||||||||||
| Settlement of Decommissioning Liabilities | (53) | (82) | (36) | ||||||||||||||
| Principal Repayment of Leases | (90) | (84) | (83) | ||||||||||||||
| Acquisitions, Net of Cash Acquired | (10) | (3,430) | (100) | ||||||||||||||
Acquisition of Ownership Interest in MEG (8) | — | (752) | — | ||||||||||||||
| Proceeds From Divestitures | 99 | 1,878 | — | ||||||||||||||
| Excess Free Funds Flow | 1,723 | (1,597) | 373 | ||||||||||||||
7 Found in the March 31, 2026, or the December 31, 2025, interim Consolidated Financial Statements.
8Represents the acquired MEG common shares purchased prior to the closing of the MEG acquisition. For further information, refer to Note 3 of the December 31, 2025, interim Consolidated Financial Statements.
Adjusted Market Capture
Adjusted market capture contains a non-GAAP financial measure and is used in the company’s U.S. Refining segment to provide an indication of margin captured relative to what was available in the market based on widely-used benchmarks. Cenovus defines adjusted market capture as refining margin, net of holding gains and losses, divided by the weighted average 3-2-1 market benchmark crack, net of RINs, expressed as a percentage. The weighted average crack spread, net of RINs, is calculated on Cenovus’s operable capacity-weighted average of the Chicago and Group 3 3-2-1 benchmark market crack spreads, net of RINs.
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| ($ millions) | Three months ended March 31, 2026 | Three months ended December 31, 2025 | |||||||||
Revenues (9) | 4,220 | 4,158 | |||||||||
Purchased Product (9) | 3,318 | 3,664 | |||||||||
Gross Margin | 902 | 494 | |||||||||
| Inventory Holding (Gain) Loss | (457) | 134 | |||||||||
Adjusted Gross Margin | 445 | 628 | |||||||||
Total Processed Inputs (Mbbls/d) | 359.9 | 375.8 | |||||||||
Adjusted Refining Margin ($/bbl) | 13.74 | 18.17 | |||||||||
Operable Capacity (Mbbls/d) | 364.8 | 364.8 | |||||||||
Operable Capacity by Regional Benchmark (percent) | |||||||||||
Chicago 3-2-1 Crack Spread Weighting | 88 | 88 | |||||||||
Group 3 3-2-1 Crack Spread Weighting | 12 | 12 | |||||||||
Benchmark Prices and Exchange Rate | |||||||||||
Chicago 3-2-1 Crack Spread (US$/bbl) | 17.55 | 18.20 | |||||||||
Group 3 3-2-1 Crack Spread (US$/bbl) | 17.16 | 19.25 | |||||||||
RINs (US$/bbl) | 8.71 | 6.04 | |||||||||
US$ per C$1 - Average | 0.729 | 0.717 | |||||||||
Weighted Average Crack Spread, Net of RINs ($/bbl) | 12.06 | 17.14 | |||||||||
| Adjusted Market Capture (percent) | 114 | 106 | |||||||||
9 Found in Note 1 of the March 31, 2026, or the December 31, 2025, 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 committed to maximizing value by developing its assets in a safe, responsible and cost-efficient manner, integrating sustainability considerations into its business plans. Cenovus common shares are listed on the Toronto and New York stock exchanges. For more information, visit cenovus.com.
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Cenovus contacts
Investors
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Media
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CENOVUS ENERGY NEWS RELEASE | 9
Exhibit 99.2
Cenovus Energy Inc.
Management’s Discussion and Analysis (unaudited)
For the Period Ended March 31, 2026
(Canadian Dollars)
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the period ended March 31, 2026 | ||
| TABLE OF CONTENTS | ||||||||||||||
Basis of Presentation
This MD&A and the interim Consolidated Financial Statements were prepared in Canadian dollars (which includes references to “dollar” or “$”), except where another currency is indicated, and in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) (the “IFRS Accounting Standards”). Production volumes are presented on a before royalties basis. Refer to the Abbreviations and Definitions section for commonly used oil and gas terms.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 2 | ||||
OVERVIEW OF CENOVUS | ||
We are a Canadian-based integrated energy company headquartered in Calgary, Alberta. We are one of the largest Canadian-based crude oil and natural gas producers, with upstream operations in Canada and the Asia Pacific region, and one of the largest Canadian-based refiners and upgraders, with downstream operations in Canada and the United States (“U.S.”).
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.
Our operations involve activities across the full value chain to develop, produce, refine, transport and market crude oil, natural gas and refined petroleum products in North America and internationally. Our physically and economically integrated upstream and downstream operations help us mitigate the impact of volatility in light-heavy crude oil price differentials and contribute to our net earnings by capturing value from crude oil, natural gas and NGLs production through to the sale of finished products such as transportation fuels.
QUARTERLY RESULTS OVERVIEW | ||
In the first quarter of 2026, we continue to deliver strong and reliable operations across all areas of our business through the disciplined execution of our business plan. Our financial results reflect solid operational performance and an overall improvement in the commodity price environment compared with the fourth quarter of 2025.
•Ongoing commitment to safety. Safety is our top value. Strengthening our safety record and maintaining reliable operations throughout our portfolio continues to be our focus.
•Strong upstream production. Total upstream production increased to 972.1 thousand BOE per day, primarily due to a full quarter of additional production from the acquisition of MEG Energy Corp. (“MEG”) through a plan of arrangement that closed on November 13, 2025 (the “MEG Acquisition”).
•Integration of MEG. Following the MEG Acquisition, we accelerated our redevelopment program at Christina Lake North, with the first redevelopment wells achieving first oil in April. In parallel, we executed a delineation program to further progress the expansion project and continued advancing optimization activities at the Christina Lake North facility. By the end of the first quarter of 2026, corporate integration and initial synergy capture initiatives were substantially complete.
•Advanced key Oil Sands growth projects. Our results in the first quarter reflect the success of key growth projects completed in the second half of 2025, including the continued ramp-up of production from the Narrows Lake tie-back to Christina Lake and incremental volumes from the Foster Creek optimization project. We continued to progress the heavy oil drilling program at our Lloydminster conventional heavy oil assets. In April 2026, the first of the new well pads in the east development area was brought online for the Sunrise growth project and production commenced. The Foster Creek Amine Claus project was mechanically completed and commissioning work is underway.
•Progressed the West White Rose project. Subsequent to March 31, 2026, we completed systems integration testing and commenced drilling operations. We are now on track to deliver first oil in the third quarter of 2026.
•Strong downstream operations. Average crude oil throughput (“throughput”) across our downstream assets was 458.5 thousand barrels per day, representing crude unit utilization of 97 percent. Our Canadian assets continue to run at or above capacity, while our U.S. assets continue to demonstrate reliable operations, allowing us to capture opportunities from changing market conditions.
•Reported solid financial results. Adjusted Funds Flow increased to $3.4 billion from $2.7 billion in the fourth quarter of 2025, driven by higher commodity prices, increased Oil Sands sales volumes and strong operational performance across our assets. Cash from operating activities was $2.2 billion, a decrease from $2.4 billion in the fourth quarter of 2025, mainly due to changes in non-cash working capital.
•Reduced long-term debt. We repaid $500 million under our term loan facility, which was obtained to fund a portion of the cash consideration for the MEG Acquisition.
•Delivered significant returns to shareholders. We returned $1.0 billion to common and preferred shareholders, including $379 million through common and preferred share dividends, $356 million through the purchase of 11.5 million common shares under our normal course issuer bid (“NCIB”) and $300 million for the redemption of the Company’s series 1 and 2 preferred shares.
•Base dividend increase. On May 5, 2026, the Board declared a second quarter base dividend of $0.220 per common share, an increase of 10 percent from the first quarter dividend declared in February 2026.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 3 | ||||
Summary of Quarterly Results
| 2026 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ millions, except where indicated) | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Upstream Production Volumes (1) (2) (MBOE/d) | 972.1 | 917.9 | 832.9 | 765.9 | 818.9 | 816.0 | 771.3 | 800.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Downstream Total Processed Inputs (3) (4) (Mbbls/d) | 484.4 | 498.4 | 757.6 | 714.9 | 700.5 | 700.5 | 674.4 | 652.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Crude Oil Unit Throughput (3) (Mbbls/d) | 458.5 | 465.5 | 710.7 | 665.8 | 665.4 | 666.7 | 642.9 | 622.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Downstream Production Volumes (1) (3) (Mbbls/d) | 509.3 | 527.5 | 770.3 | 729.4 | 722.4 | 722.6 | 685.2 | 659.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues (5) | 12,356 | 10,883 | 13,195 | 12,319 | 13,299 | 12,813 | 13,819 | 14,582 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Margin (6) | 4,442 | 2,777 | 2,954 | 2,066 | 2,811 | 2,274 | 2,408 | 2,936 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Margin – Upstream (7) | 3,708 | 2,628 | 2,590 | 2,137 | 3,048 | 2,670 | 2,731 | 3,089 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Margin – Downstream (7) | 734 | 149 | 364 | (71) | (237) | (396) | (323) | (153) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash From (Used In) Operating Activities | 2,181 | 2,408 | 2,131 | 2,374 | 1,315 | 2,029 | 2,474 | 2,807 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjusted Funds Flow (6) | 3,377 | 2,674 | 2,466 | 1,519 | 2,212 | 1,601 | 1,960 | 2,361 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Share – Basic (6) ($) | 1.80 | 1.47 | 1.38 | 0.84 | 1.21 | 0.88 | 1.06 | 1.27 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Share – Diluted (6) ($) | 1.80 | 1.46 | 1.38 | 0.84 | 1.21 | 0.87 | 1.05 | 1.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital Investment | 1,170 | 1,360 | 1,154 | 1,164 | 1,229 | 1,478 | 1,346 | 1,155 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Free Funds Flow (6) | 2,207 | 1,314 | 1,312 | 355 | 983 | 123 | 614 | 1,206 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Excess Free Funds Flow (6) | 1,723 | (1,597) | 745 | (306) | 373 | (416) | 146 | 735 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Earnings (Loss) | 1,570 | 934 | 1,286 | 851 | 859 | 146 | 820 | 1,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Share – Basic ($) | 0.84 | 0.51 | 0.72 | 0.47 | 0.47 | 0.08 | 0.44 | 0.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Per Share – Diluted ($) | 0.83 | 0.50 | 0.72 | 0.45 | 0.47 | 0.07 | 0.42 | 0.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Assets | 64,848 | 63,424 | 53,573 | 55,820 | 56,380 | 56,539 | 54,680 | 56,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt, Including Current Portion | 10,633 | 11,032 | 7,156 | 7,241 | 7,524 | 7,534 | 7,199 | 7,275 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Debt | 8,058 | 8,292 | 5,255 | 4,934 | 5,079 | 4,614 | 4,196 | 4,258 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash Returns to Common and Preferred Shareholders | 1,035 | 1,094 | 1,274 | 819 | 595 | 706 | 1,070 | 1,034 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares – Base Dividends | 377 | 376 | 356 | 364 | 327 | 330 | 329 | 334 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Base Dividends Per Common Share ($) | 0.200 | 0.200 | 0.200 | 0.200 | 0.180 | 0.180 | 0.180 | 0.180 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares – Variable Dividends | — | — | — | — | — | — | — | 251 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Dividends Per Common Share ($) | — | — | — | — | — | — | — | 0.135 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchase of Common Shares Under NCIB | 356 | 714 | 918 | 301 | 62 | 108 | 732 | 440 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Paid on Preferred Shares | 2 | 4 | — | 4 | 6 | 18 | 9 | 9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Share Redemptions | 300 | — | — | 150 | 200 | 250 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Refer to the Operating and Financial Results section of this MD&A for a summary of total production by product type.
(2)Includes results of the MEG Acquisition from November 13, 2025.
(3)Represents Cenovus’s net interest in refining operations. On September 30, 2025, Cenovus divested its entire 50 percent interest in the jointly-owned Wood River and Borger refineries held through WRB Refining LP (“WRB”) (the “WRB Divestiture”). Following the WRB Divestiture, all refining operations are wholly-owned.
(4)Total processed inputs include crude oil and other feedstocks. Blending is excluded.
(5)2024 comparative periods reflect certain revisions. See the Prior Period Revisions section in our annual MD&A for the year ended December 31, 2024, for further details.
(6)Non-GAAP financial measure or contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
(7)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 4 | ||||
OPERATING AND FINANCIAL RESULTS | ||
Selected Operating Results — Upstream
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| Percent Change | |||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
Production Volumes by Segment (1) (MBOE/d) | |||||||||||||||||||||||||||||||||||||||||||||||
Oil Sands (2) | 775.0 | 24 | 626.2 | ||||||||||||||||||||||||||||||||||||||||||||
Conventional (3) | 121.7 | (2) | 123.9 | ||||||||||||||||||||||||||||||||||||||||||||
Offshore (3) | 75.4 | 10 | 68.8 | ||||||||||||||||||||||||||||||||||||||||||||
Total Production Volumes | 972.1 | 19 | 818.9 | ||||||||||||||||||||||||||||||||||||||||||||
Production Volumes by Product (1) | |||||||||||||||||||||||||||||||||||||||||||||||
Bitumen (Mbbls/d) | 743.6 | 23 | 602.5 | ||||||||||||||||||||||||||||||||||||||||||||
Heavy Crude Oil (Mbbls/d) | 29.0 | 33 | 21.8 | ||||||||||||||||||||||||||||||||||||||||||||
Light Crude Oil (Mbbls/d) | 24.3 | 45 | 16.8 | ||||||||||||||||||||||||||||||||||||||||||||
NGLs (Mbbls/d) | 33.2 | 11 | 29.8 | ||||||||||||||||||||||||||||||||||||||||||||
Conventional Natural Gas (MMcf/d) | 852.0 | (4) | 887.9 | ||||||||||||||||||||||||||||||||||||||||||||
Total Production Volumes (MBOE/d) | 972.1 | 19 | 818.9 | ||||||||||||||||||||||||||||||||||||||||||||
(1)Refer to the Oil Sands, Conventional and Offshore reportable segments section of this MD&A for a summary of production by product type.
(2)Results for the three months ended March 31, 2026, include the MEG Acquisition, which closed on November 13, 2025.
(3)Reported production volumes in the Conventional and Offshore segments include Cenovus’s 30 percent equity interest in the Duvernay Energy Corporation (“Duvernay”) joint venture and 40 percent equity interest in the Husky-CNOOC Madura Limited (“HCML”) joint venture, respectively. Our equity interests in Duvernay and HCML are accounted for using the equity method in the interim Consolidated Financial Statements.
Production
Total upstream production increased in the first quarter of 2026 compared with the first quarter of 2025, primarily due to:
•Additional production at Christina Lake from the MEG Acquisition and the continued ramp-up of production following the completion of the Narrows Lake tie-back to Christina Lake in the third quarter of 2025.
•Incremental production from the completion of the Foster Creek optimization project in the fourth quarter of 2025 and successful base well optimization activities.
•Successful results from redevelopment and sustaining programs at Sunrise.
•Strong production from our Atlantic operations in the Offshore segment following the completion of the SeaRose asset life extension (“ALE”) project in the first quarter of 2025.
Selected Operating Results — Downstream
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| Percent Change | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
Crude Oil Unit Throughput by Segment (Mbbls/d) | |||||||||||||||||||||||||||||||||||
Canadian Refining | 115.3 | 3 | 111.9 | ||||||||||||||||||||||||||||||||
U.S. Refining | 343.2 | (38) | 553.5 | ||||||||||||||||||||||||||||||||
Total Crude Oil Unit Throughput | 458.5 | (31) | 665.4 | ||||||||||||||||||||||||||||||||
Production Volumes by Product (1) (Mbbls/d) | |||||||||||||||||||||||||||||||||||
Gasoline | 185.1 | (35) | 284.7 | ||||||||||||||||||||||||||||||||
Distillates (2) | 138.5 | (38) | 224.3 | ||||||||||||||||||||||||||||||||
Synthetic Crude Oil | 52.0 | (1) | 52.4 | ||||||||||||||||||||||||||||||||
Asphalt | 34.7 | (18) | 42.3 | ||||||||||||||||||||||||||||||||
Ethanol | 5.5 | 28 | 4.3 | ||||||||||||||||||||||||||||||||
Other | 93.5 | (18) | 114.4 | ||||||||||||||||||||||||||||||||
Total Production Volumes | 509.3 | (29) | 722.4 | ||||||||||||||||||||||||||||||||
(1)Refer to the Canadian Refining and U.S. Refining reportable segments section of this MD&A for a summary of production by product type.
(2)Includes diesel and jet fuel.
In the first quarter of 2026, total downstream throughput and refined product production decreased compared with the same period in 2025, primarily due to the WRB Divestiture completed on September 30, 2025. The decreases were partially offset by our Canadian Refining assets running at, or above, full capacity, and reliable operations at our U.S. Refining assets.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 5 | ||||
Selected Consolidated Financial Results
Revenues
During the first quarter of 2026, revenues decreased seven percent compared with the first quarter of 2025, primarily due to lower sales volumes from our U.S. Refining segment as a result of the WRB Divestiture. The decrease was partially offset by higher Oil Sands sales volumes following the MEG Acquisition and our downstream results being positively impacted by higher distillate pricing.
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) | 2026 | 2025 | |||||||||||||||||||||||||||
Gross Sales | |||||||||||||||||||||||||||||
| External Sales | 13,339 | 14,205 | |||||||||||||||||||||||||||
Intersegment Sales | 2,658 | 2,752 | |||||||||||||||||||||||||||
| 15,997 | 16,957 | ||||||||||||||||||||||||||||
| Royalties | (983) | (906) | |||||||||||||||||||||||||||
| Revenues | 15,014 | 16,051 | |||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Purchased Product | 5,622 | 8,249 | |||||||||||||||||||||||||||
| Transportation and Blending | 3,375 | 3,247 | |||||||||||||||||||||||||||
| Operating Expenses | 1,573 | 1,747 | |||||||||||||||||||||||||||
Realized (Gain) Loss on Risk Management | 2 | (3) | |||||||||||||||||||||||||||
Operating Margin | 4,442 | 2,811 | |||||||||||||||||||||||||||
Operating Margin by Segment
Three Months Ended March 31, 2026 and 2025
Operating Margin increased in the first quarter of 2026 compared with the first quarter of 2025, primarily due to:
•Higher Gross Margin in our downstream segments, due to the benefit of processing feedstock purchased at lower prices and higher distillate pricing.
•Higher Operating Margin in our Oil Sands segment, primarily due to a full quarter of operations from the MEG Acquisition.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 6 | ||||
Cash From (Used in) Operating Activities and Adjusted 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.
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||||||||
| Cash From (Used in) Operating Activities | 2,181 | 1,315 | |||||||||||||||||||||||||||
| (Add) Deduct: | |||||||||||||||||||||||||||||
Settlement of Decommissioning Liabilities | (53) | (36) | |||||||||||||||||||||||||||
| Net Change in Non-Cash Working Capital | (1,143) | (861) | |||||||||||||||||||||||||||
Adjusted Funds Flow | 3,377 | 2,212 | |||||||||||||||||||||||||||
Adjusted Funds Flow was higher in the first quarter of 2026 compared with the same period in 2025, primarily due to increased Operating Margin, partially offset by higher current tax expense.
Cash from operating activities increased in the first quarter of 2026 compared with the first quarter of 2025, primarily due to increased Operating Margin, partially offset by changes in non-cash working capital and higher current tax expense. The net change in non-cash working capital was a use of cash of $1.1 billion, compared with $861 million in first quarter of 2025, primarily due to an increase in accounts receivable and inventories, partially offset by higher accounts payable and lower income tax receivable.
Net Earnings (Loss)
Net earnings in the first quarter of 2026 was $1.6 billion, compared with $859 million in first quarter of 2025, due to higher Operating Margin, as discussed above, partially offset by higher income tax expense, general and administrative expense, and DD&A expense.
Net Debt
As at | March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||
| Current Portion of Long-Term Debt | — | — | |||||||||||||||||||||||||||
| Long-Term Portion of Long-Term Debt | 10,633 | 11,032 | |||||||||||||||||||||||||||
Total Debt | 10,633 | 11,032 | |||||||||||||||||||||||||||
| Less: Cash and Cash Equivalents | (2,575) | (2,740) | |||||||||||||||||||||||||||
Net Debt | 8,058 | 8,292 | |||||||||||||||||||||||||||
Total Debt decreased $399 million from December 31, 2025, primarily due to the repayment of $500 million under our term loan facility, partially offset by unrealized foreign exchange losses on U.S. dollar denominated long-term debt due to the weakening of the Canadian dollar.
Net Debt decreased $234 million from December 31, 2025, due to cash from operating activities of $2.2 billion and net proceeds on repurchase agreements of $294 million, partially offset by capital investment of $1.2 billion and returns to shareholders of $1.0 billion. For further details, see the Liquidity and Capital Resources section of this MD&A.
Capital Investment (1)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Upstream | |||||||||||||||||||||||||||||||||||
| Oil Sands | 851 | 763 | |||||||||||||||||||||||||||||||||
| Conventional | 93 | 122 | |||||||||||||||||||||||||||||||||
| Offshore | 142 | 241 | |||||||||||||||||||||||||||||||||
| Total Upstream | 1,086 | 1,126 | |||||||||||||||||||||||||||||||||
| Downstream | |||||||||||||||||||||||||||||||||||
| Canadian Refining | 24 | 22 | |||||||||||||||||||||||||||||||||
| U.S. Refining | 58 | 77 | |||||||||||||||||||||||||||||||||
| Total Downstream | 82 | 99 | |||||||||||||||||||||||||||||||||
| Corporate and Eliminations | 2 | 4 | |||||||||||||||||||||||||||||||||
| Total Capital Investment | 1,170 | 1,229 | |||||||||||||||||||||||||||||||||
(1)Includes expenditures on property, plant and equipment (“PP&E”), exploration and evaluation (“E&E”) assets, and capitalized interest. Excludes capital expenditures related to joint ventures accounted for using the equity method in the interim Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 7 | ||||
Capital investment in the first quarter of 2026 was primarily related to:
•Sustaining activities in our Oil Sands segment including the delivery of our integrated winter program.
•Drilling, completion, tie-in and infrastructure projects in the Conventional segment.
•Sustaining activities in our refining segments.
•The support and progression of growth projects.
During the first quarter of 2026, we advanced key growth projects across our business:
•At Christina Lake, we accelerated our redevelopment program at Christina Lake North, with the first redevelopment wells achieving first oil in April. In parallel, we executed a delineation program to further progress the expansion project and continued advancing optimization activities at the Christina Lake North facility.
•At Lloydminster, the conventional heavy oil drilling program continued to progress with new production brought online during the quarter.
•As part of the Sunrise growth project, we brought the first of the new well pads online in the east development area in April 2026.
•We achieved mechanical completion for the Foster Creek Amine Claus project and commissioning work is underway.
Subsequent to March 31, 2026, we completed systems integration testing and commenced drilling operations at the West White Rose project. We are now on track to deliver first oil in the third quarter of 2026.
Drilling Activity
Net Stratigraphic Test Wells and Observation Wells | Net Production Wells (1) | ||||||||||||||||||||||
| Three Months Ended March 31, | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
Foster Creek | 78 | 73 | 5 | 8 | |||||||||||||||||||
Christina Lake (2) | 111 | 65 | 19 | 5 | |||||||||||||||||||
| Sunrise | 18 | 21 | — | — | |||||||||||||||||||
Lloydminster Thermal | 2 | — | 11 | 2 | |||||||||||||||||||
| Lloydminster Conventional Heavy Oil | — | — | 6 | 9 | |||||||||||||||||||
| 209 | 159 | 41 | 24 | ||||||||||||||||||||
(1)Steam-assisted gravity drainage (“SAGD”) well pairs in the Oil Sands segment are counted as a single producing well.
(2)Results for the three months ended March 31, 2026, include the MEG Acquisition, which closed on November 13, 2025.
Stratigraphic test wells were drilled to help identify future well pad locations and to further evaluate our assets. Observation wells were drilled to gather information and monitor reservoir conditions.
| Three Months Ended March 31, 2026 | Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||||
| (net wells) | Drilled | Completed | Tied-in | Drilled | Completed | Tied-in | |||||||||||||||||||||||||||||
Conventional (1) | 15 | 7 | 7 | 13 | 14 | 13 | |||||||||||||||||||||||||||||
(1)Includes values attributable to Cenovus’s 30 percent equity interest in the Duvernay joint venture.
In the Offshore segment, no wells were drilled or completed in the first quarter of 2026 or 2025.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 8 | ||||
COMMODITY PRICES UNDERLYING OUR FINANCIAL RESULTS | ||
The following table shows selected market benchmark prices and average exchange rates to assist in understanding our financial results. For a full discussion of our commodity prices and related key performance drivers, refer to our 2025 annual MD&A.
Selected Benchmark Prices and Exchange Rates (1)
| (Average US$/bbl, unless otherwise indicated) | Q1 2026 | Percent Change | Q1 2025 | Q4 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dated Brent | 80.61 | 7 | 75.66 | 63.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WTI | 71.93 | 1 | 71.42 | 59.14 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential Dated Brent – WTI | 8.68 | 105 | 4.24 | 4.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WCS at Hardisty | 57.76 | (2) | 58.75 | 47.94 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential WTI – WCS at Hardisty | 14.17 | 12 | 12.67 | 11.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
WCS at Hardisty (C$/bbl) | 79.21 | (6) | 84.31 | 66.89 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WCS at Nederland | 65.21 | (4) | 67.74 | 55.63 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential WTI – WCS at Nederland | 6.72 | 83 | 3.68 | 3.51 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Condensate (C5 at Edmonton) | 71.40 | 2 | 69.88 | 57.01 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential Condensate – WTI Premium/(Discount) | (0.53) | (66) | (1.54) | (2.13) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential Condensate – WCS at Hardisty Premium/(Discount) | 13.64 | 23 | 11.13 | 9.07 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensate (C$/bbl) | 97.91 | (2) | 100.29 | 79.54 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Synthetic at Edmonton | 71.54 | 4 | 69.07 | 57.84 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential Synthetic – WTI Premium/(Discount) | (0.39) | (83) | (2.35) | (1.30) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Synthetic at Edmonton (C$/bbl) | 98.10 | (1) | 99.12 | 80.69 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Refined Product Prices | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chicago Regular Unleaded Gasoline (“RUL”) | 81.24 | (2) | 83.08 | 70.66 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chicago Ultra-low Sulphur Diesel (“ULSD”) | 105.95 | 19 | 89.12 | 90.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Refining Benchmarks | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chicago 3-2-1 Crack Spread (2) | 17.55 | 28 | 13.68 | 18.20 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Group 3 3-2-1 Crack Spread (2) | 17.16 | 4 | 16.48 | 19.25 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Renewable Identification Numbers (“RINs”) | 8.71 | 83 | 4.76 | 6.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Upgrading Differential (3) (C$/bbl) | 18.55 | 26 | 14.69 | 13.53 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Natural Gas Prices | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AECO (4) (C$/Mcf) | 2.01 | (7) | 2.17 | 2.23 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
NYMEX (5) (US$/Mcf) | 5.04 | 38 | 3.65 | 3.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Differential AECO – NYMEX (US$/Mcf) | (3.58) | 67 | (2.14) | (1.94) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign Exchange Rates | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US$ per C$1 – Average | 0.729 | 5 | 0.697 | 0.717 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
US$ per C$1 – End of Period | 0.717 | 3 | 0.696 | 0.730 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chinese Yuan (“RMB”) per C$1 – Average | 5.048 | — | 5.069 | 5.084 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)These benchmark prices are not our Realized Sales Prices and represent approximate values. For our Realized Sales Prices refer to the Netback tables in the upstream reportable segments section of this MD&A.
(2)The average 3-2-1 crack spread is an indicator of the adjusted refining margin and is valued on a last-in, first-out accounting basis.
(3)The upgrading differential is the difference between synthetic crude oil at Edmonton and Lloydminster Blend crude oil at Hardisty. The upgrading differential does not precisely mirror the configuration and the product output of our Canadian Refining assets; however, it is used as a general market indicator.
(4)Alberta Energy Company (“AECO”) 5A natural gas daily index.
(5)New York Mercantile Exchange (“NYMEX”) natural gas monthly index.
Crude Oil and Condensate Benchmarks
In the first quarter of 2026, global crude oil benchmark prices, Brent and WTI, increased compared with the first quarter of 2025. Prices entered 2026 at lower levels than the previous year, as global supply exceeded demand, leading to a continued building of inventory globally. However, prices spiked following the commencement of the U.S.-Iran conflict as markets rapidly priced in a higher risk of supply disruption. The effective closure of the Strait of Hormuz, a narrow maritime choke point crucial to large volumes of global crude and refined products trade, stranded volumes resulting in a near-term shortfall in global supply. Markets continue to experience very high volatility as this conflict evolves.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 9 | ||||
The WTI-WCS differential at both Hardisty and Nederland widened in the first quarter of 2026, compared with the same period in 2025. Heavy crude weakened relative to WTI due to high global supply of heavy grades as OPEC+ continued to unwind production cuts, with further downward pressure due to incremental Venezuelan heavy barrels re-entering the export market following the capture of former Venezuela President Nicolas Maduro.
In Canada, we upgrade heavy crude oil and bitumen into a sweet synthetic crude oil, the Husky Synthetic Blend (“HSB”), at the 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.
In the first quarter of 2026, synthetic crude oil at Edmonton strengthened relative to WTI compared with the same period in 2025. The strength in pricing relative to the first quarter of 2025 was driven in part by strong diesel pricing, as synthetic crude yields a higher proportion of diesel than other crude grades.
In the first quarter of 2026, the average Edmonton condensate benchmark traded at a smaller discount to WTI compared with the first quarter of 2025, due to tight Canadian supply and strong demand for heavy crude blending.
Crude Oil Benchmark Prices (1)
(1)Forward pricing as at March 31, 2026.
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 adjusted 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 basis.
In the first quarter of 2026, refined product crack spreads in Chicago and Group 3 increased compared with the first quarter of 2025. The increase is largely a result of sharp price spikes for diesel following the U.S.-Iran conflict, which has limited global supply of refined products, as well as crude. The average cost of RINs was higher in the first quarter of 2026, compared with the same period in 2025, due to weaker U.S. production and imports of renewable diesel and biodiesel causing a decline in RINs generation.
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 generally reflects the differential between Brent and WTI benchmark prices.
Our adjusted refining margin is affected by various other factors such as the quality and purchase location of crude oil feedstock, refinery configuration and product output. The benchmark market crack spreads do not precisely mirror the configuration and product output of our refineries, or the location we sell product; however, they are used as a general market indicator. Refer to the Specified Financial Measures Advisory of this MD&A for further details.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 10 | ||||
Refined Product Benchmarks (1)
(1)Forward pricing as at March 31, 2026.
Natural Gas Benchmarks
In the first quarter of 2026, AECO prices decreased while NYMEX prices increased, compared with the same period in 2025. The increase in NYMEX prices was supported by strong liquified natural gas (“LNG”) demand and winter-driven heating demand, while the decrease in AECO prices was impacted by limited Western Canadian takeaway capacity, causing the AECO discount to NYMEX to widen. In the first quarter of 2026, both Western Canadian and U.S. natural gas production increased compared with the first quarter of 2025. The price received for our Asia Pacific natural gas production is largely based on long-term contracts.
Foreign Exchange and Interest Rate Benchmarks
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. dollar benchmark prices. In the first quarter of 2026, on average, the Canadian dollar strengthened relative to the U.S. dollar compared with the first quarter of 2025, negatively impacting our reported revenues and positively impacting our U.S. Refining operating expenses.
A portion of our long-term sales contracts in the Asia Pacific region 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 2026, on average, the Canadian dollar remained relatively consistent to the RMB, compared with the first quarter of 2025.
Our interest income, floating rate borrowing costs, reported decommissioning liabilities and fair value measurements are impacted by fluctuations in interest rates. A change in interest rates could change our net finance costs, affect how certain liabilities are measured, and impact our cash flow and financial results.
As at March 31, 2026, the Bank of Canada’s policy interest rate was 2.25 percent. On April 29, 2026, the Bank of Canada held the policy interest rate at 2.25 percent.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 11 | ||||
OUTLOOK | ||
Commodity Price Outlook
Global crude oil prices entered 2026 lower than the first quarter of 2025, as supply growth outpaced demand following the unwinding of OPEC+ voluntary cuts, with risks that oversupply was likely to continue throughout the year and weigh on prices. The U.S.-Iran conflict resulted in an immediate spike in global prices and altered the short-to-medium-term outlook for all aspects of the energy industry. The effective closure of the Strait of Hormuz introduced high volatility across crude, refined products and natural gas prices, stranding energy supply and introducing a wide range of potential outcomes. Price direction remains highly uncertain and dependent on any deescalation or intensification of the conflict, damage to infrastructure, inventory constraints, production shut-ins, refinery curtailment in the Middle East and other areas dependent on supply from that region and the impact to the economy amongst other unpredictable variables. OPEC+ policy continues to remain crucial to global oil supply and demand balances and prices amid this conflict. Policy and sanction uncertainty related to Venezuelan crude exports continues to influence global heavy crude oil supply and trade flows. The global trade war and ongoing geopolitical tensions may reduce global GDP growth and oil demand, while increasing recessionary risks and potentially having additional knock-on effects to the economy.
In addition to the above, our commodity pricing outlook for the next 12 months is influenced by the following:
•OPEC+ policy and the pace at which OPEC+ unwinds production cuts.
•In the near-term, there is a higher risk of a tariff-induced global economic slowdown that could slow oil demand.
•We expect the WTI-WCS at Hardisty differential will remain largely tied to global supply factors and heavy crude oil processing capacity, as long as supply does not exceed Canadian crude oil export capacity.
•Refined product prices and market crack spreads are likely to continue to fluctuate, adjusting for seasonal trends and refinery utilization in North America and globally.
•Condensate prices will fluctuate seasonally with oil sands blending demand, import pipeline utilization, and global supply and demand factors.
•AECO and NYMEX natural gas prices are expected to remain volatile, impacted by LNG export capacity and weather-driven demand factors.
•We expect the Canadian dollar to continue to be impacted by 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, the U.S. Administration’s policies toward Canada-U.S. trade, crude oil prices and emerging macro-economic factors.
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 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 – heavy oil refining capacity allows us to capture value from both the WTI-WCS differential for Canadian crude oil and spreads on refined products.
•Monitoring market fundamentals and optimizing run rates at our refineries accordingly.
•Traditional crude oil storage tanks in various geographic locations.
2026 Corporate Guidance
Our 2026 corporate guidance dated December 10, 2025, remains unchanged and is available on our website at cenovus.com.
The following table is a sub-set of our full guidance for 2026:
Capital Investment ($ millions) | Production (MBOE/d) | Crude Oil Unit Throughput (Mbbls/d) | |||||||||||||||
| Upstream | |||||||||||||||||
| Oil Sands | 3,500 - 3,600 | 755 - 780 | |||||||||||||||
| Conventional | 450 - 500 | 120 - 125 | |||||||||||||||
| Offshore | 450 - 500 | 70 - 80 | |||||||||||||||
| Upstream Total | 4,400 - 4,600 | 945 - 985 | |||||||||||||||
| Downstream | |||||||||||||||||
| Canadian Refining | 105 - 110 | ||||||||||||||||
| U.S. Refining | 325 - 340 | ||||||||||||||||
| Downstream Total | 600 - 700 | 430 - 450 | |||||||||||||||
| Corporate and Eliminations | Up to 25 | ||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 12 | ||||
REPORTABLE SEGMENTS | ||
For a description of our reportable segments, refer to Note 1 of the interim Consolidated Financial Statements.
UPSTREAM
Oil Sands
Financial Results
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||||||||
| Gross Sales | |||||||||||||||||||||||||||||
External Sales | 6,892 | 5,904 | |||||||||||||||||||||||||||
Intersegment Sales | 1,892 | 1,953 | |||||||||||||||||||||||||||
| 8,784 | 7,857 | ||||||||||||||||||||||||||||
| Royalties | (940) | (861) | |||||||||||||||||||||||||||
| Revenues | 7,844 | 6,996 | |||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Purchased Product | 617 | 632 | |||||||||||||||||||||||||||
| Transportation and Blending | 3,283 | 3,151 | |||||||||||||||||||||||||||
Operating | 826 | 677 | |||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 23 | (8) | |||||||||||||||||||||||||||
| Operating Margin | 3,095 | 2,544 | |||||||||||||||||||||||||||
Unrealized (Gain) Loss on Risk Management | (90) | (7) | |||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 1,027 | 834 | |||||||||||||||||||||||||||
| Exploration Expense | 1 | 4 | |||||||||||||||||||||||||||
| (Income) Loss from Equity-Accounted Affiliates | — | — | |||||||||||||||||||||||||||
| Segment Income (Loss) | 2,157 | 1,713 | |||||||||||||||||||||||||||
Operating Results
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
Total Sales Volumes (1) (MBOE/d) | 766.2 | 636.8 | ||||||||||||||||||||||||||||||||||||
Crude Oil Production by Asset (Mbbls/d) | ||||||||||||||||||||||||||||||||||||||
| Foster Creek | 223.0 | 202.7 | ||||||||||||||||||||||||||||||||||||
Christina Lake (2) | 358.9 | 237.8 | ||||||||||||||||||||||||||||||||||||
Sunrise | 59.4 | 52.1 | ||||||||||||||||||||||||||||||||||||
| Lloydminster Thermal | 102.3 | 109.9 | ||||||||||||||||||||||||||||||||||||
| Lloydminster Conventional Heavy Oil | 29.0 | 21.8 | ||||||||||||||||||||||||||||||||||||
Total Crude Oil Production (3) (Mbbls/d) | 772.6 | 624.3 | ||||||||||||||||||||||||||||||||||||
Natural Gas (1) (MMcf/d) | 14.4 | 11.4 | ||||||||||||||||||||||||||||||||||||
Total Production (MBOE/d) | 775.0 | 626.2 | ||||||||||||||||||||||||||||||||||||
Effective Royalty Rate (4) (percent) | 19.2 | 21.1 | ||||||||||||||||||||||||||||||||||||
Netback (5) ($/bbl) | ||||||||||||||||||||||||||||||||||||||
Realized Sales Price | 79.80 | 80.99 | ||||||||||||||||||||||||||||||||||||
Royalties | 13.57 | 15.03 | ||||||||||||||||||||||||||||||||||||
Transportation and Blending | 8.86 | 9.85 | ||||||||||||||||||||||||||||||||||||
Operating | 11.92 | 11.77 | ||||||||||||||||||||||||||||||||||||
Total Netback ($/bbl) | 45.45 | 44.34 | ||||||||||||||||||||||||||||||||||||
(1)Bitumen, heavy crude oil and natural gas. Natural gas is a conventional natural gas product type.
(2)Results for the three months ended March 31, 2026, include the MEG Acquisition, which closed on November 13, 2025.
(3)Crude oil production is primarily bitumen, except for Lloydminster conventional heavy oil, which is heavy crude oil.
(4)Effective royalty rates are equal to royalty expense divided by product revenue, net of transportation expenses, excluding realized (gain) loss on risk management.
(5)Contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 13 | ||||
Revenues
Gross sales increased in the first quarter of 2026 compared with the same period in 2025, due to higher sales volumes, partially offset by a slightly lower Realized Sales Price.
Price
Our bitumen and heavy oil production is blended with condensate in order to transport it to market through pipelines. In our Netback calculations, Realized Sales Price excludes the impact of purchased condensate but is influenced by condensate pricing. As the cost of condensate increases relative to the price of blended crude oil or our blend ratio increases, our realized bitumen and heavy oil sales price decreases.
Our Realized Sales Price in the first quarter of 2026 decreased slightly compared with the same period in 2025, reflecting a wider WTI-WCS differential, partially offset by slightly higher WTI benchmark prices.
Sales by Location
In the first quarter of 2026, approximately 31 percent of our sales volumes were sold to third-parties at destinations outside of Alberta, which includes the West Coast of Canada, PADD II and USGC. Approximately 23 percent of our sales volumes were sold to our downstream operations in the quarter.
Production Volumes
Oil Sands crude oil production increased in the first quarter of 2026, compared with the same period in 2025, primarily due to:
•Additional production at Christina Lake from the MEG Acquisition and the continued ramp-up of production following the completion of the Narrows Lake tie-back to Christina Lake in the third quarter of 2025.
•Incremental production from the completion of the Foster Creek optimization project in the fourth quarter of 2025 and successful base well optimization activities.
•Successful redevelopment at our Lloydminster assets resulting in higher reservoir performance.
•Successful results from the redevelopment and sustaining programs at Sunrise.
The increases were partially offset by the ramp-up of production at our Rush Lake facilities following an incident in the second quarter of 2025. In the fourth quarter of 2025, we successfully restarted production and ramp-up activities are progressing.
Royalties
Royalty calculations for our Oil Sands segment are based on government prescribed royalty regimes in Alberta and Saskatchewan. Refer to our 2025 annual MD&A for further details.
In the first quarter of 2026, Oil Sands royalties increased compared with the same period in 2025, primarily due to higher sales volumes as a result of the MEG Acquisition, partially offset by lower Alberta sliding scale oil sands royalty rates. The Oil Sands effective royalty rate in the first quarter of 2026 decreased compared with the same period in 2025, mainly due to lower Alberta sliding scale oil sands royalty rates.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 14 | ||||
Expenses
Transportation and Blending
In the first quarter of 2026, blending expenses increased compared with the same period in 2025, primarily due to higher sales volumes, partially offset by the use of lower priced condensate purchased in prior periods.
In the first quarter of 2026, transportation expenses increased compared with the same period in 2025, primarily due to higher sales volumes, partially offset by a decrease in per-unit transportation expenses.
Per-Unit Transportation Expenses (1)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| ($/bbl) | 2026 | 2025 | |||||||||||||||||||||||||||
Foster Creek | 12.28 | 15.85 | |||||||||||||||||||||||||||
Christina Lake | 8.08 | 6.12 | |||||||||||||||||||||||||||
Sunrise | 13.55 | 18.07 | |||||||||||||||||||||||||||
Lloydminster (2) | 2.87 | 3.42 | |||||||||||||||||||||||||||
Total Oil Sands | 8.86 | 9.85 | |||||||||||||||||||||||||||
(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.
(2)Includes Lloydminster thermal and Lloydminster conventional heavy oil assets.
Per-unit transportation expenses decreased in the first quarter of 2026 compared with first quarter of 2025, due to:
•Lower per-unit transportation expenses at Foster Creek, primarily due to lower sales volumes on TMX and lower rail costs. In the first quarter of 2026, 24 percent and 35 percent of our sales volumes were sold at West Coast and U.S. destinations, respectively (2025 – 32 percent and 35 percent, respectively).
•Lower per-unit transportation expenses at Sunrise, primarily due to lower sales volumes on TMX, partially offset by higher sales volumes to U.S. destinations. In the first quarter of 2026, 28 percent and 37 percent of our sales volumes were sold at West Coast and U.S. destinations, respectively (2025 – 73 percent and 27 percent, respectively).
•Lower per-unit transportation expenses at Lloydminster, primarily due to lower sales volumes sold at U.S. destinations. During the first quarter of 2026, no sales volumes were sold at U.S. destinations (2025 – two percent).
Lower Oil Sands per-unit transportation expenses, as discussed above, were partially offset by higher per-unit transportation expenses at Christina Lake, primarily due to higher sales volumes on TMX following the MEG Acquisition. During the first quarter of 2026, we shipped eight percent and 16 percent of our total sales volumes at West Coast and U.S. destinations, respectively (2025 – nil and 15 percent, respectively).
Operating
Primary drivers of our operating expenses in the three months ended March 31, 2026, were energy, workforce, and repairs and maintenance. Total operating expenses in the first quarter of 2026 increased compared with the first quarter of 2025, primarily due to higher overall operating costs at our Christina Lake assets related to the additional production from the MEG Acquisition.
Per-Unit Operating Expenses (1)
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
($/bbl) | 2026 | Percent Change | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Foster Creek | |||||||||||||||||||||||||||||||||||||||||||||||
Fuel | 2.53 | 5 | 2.41 | ||||||||||||||||||||||||||||||||||||||||||||
Non-Fuel | 7.75 | 5 | 7.41 | ||||||||||||||||||||||||||||||||||||||||||||
Total | 10.28 | 5 | 9.82 | ||||||||||||||||||||||||||||||||||||||||||||
| Christina Lake | |||||||||||||||||||||||||||||||||||||||||||||||
| Fuel | 3.03 | 21 | 2.50 | ||||||||||||||||||||||||||||||||||||||||||||
| Non-Fuel | 6.20 | (1) | 6.26 | ||||||||||||||||||||||||||||||||||||||||||||
Total | 9.23 | 5 | 8.76 | ||||||||||||||||||||||||||||||||||||||||||||
(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 15 | ||||
Per-Unit Operating Expenses (1) — Continued
| Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
($/bbl) | 2026 | Percent Change | 2025 | ||||||||||||||||||||||||||||||||
| Sunrise | |||||||||||||||||||||||||||||||||||
| Fuel | 4.18 | (3) | 4.33 | ||||||||||||||||||||||||||||||||
| Non-Fuel | 13.57 | 3 | 13.22 | ||||||||||||||||||||||||||||||||
Total | 17.75 | 1 | 17.55 | ||||||||||||||||||||||||||||||||
Lloydminster (2) | |||||||||||||||||||||||||||||||||||
| Fuel | 3.19 | (13) | 3.68 | ||||||||||||||||||||||||||||||||
| Non-Fuel | 16.09 | 9 | 14.78 | ||||||||||||||||||||||||||||||||
Total | 19.28 | 4 | 18.46 | ||||||||||||||||||||||||||||||||
| Total Oil Sands | |||||||||||||||||||||||||||||||||||
| Fuel | 3.00 | 5 | 2.85 | ||||||||||||||||||||||||||||||||
| Non-Fuel | 8.92 | — | 8.92 | ||||||||||||||||||||||||||||||||
| Total | 11.92 | 1 | 11.77 | ||||||||||||||||||||||||||||||||
(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.
(2)Includes Lloydminster thermal and Lloydminster conventional heavy oil assets.
Total Oil Sands per-unit fuel expenses increased in the first quarter of 2026, compared with the same period in 2025, primarily due to higher natural gas consumption from the MEG Acquisition, partially offset by lower average AECO benchmark pricing and lower natural gas consumption at our Lloydminster thermal assets.
Total Oil Sands per-unit non-fuel expenses were consistent between the first quarter of 2026 and 2025 as the increases in per-unit non-fuel operating expenses at our Foster Creek, Sunrise and Lloydminster assets were offset by the decrease in per-unit non-fuel operating expenses at Christina Lake.
•Increased per-unit non-fuel costs at our Lloydminster assets were driven by higher workover and GHG compliance costs.
•Increased per-unit non-fuel costs at Foster Creek primarily due to higher GHG compliance costs, partially offset by slightly higher sales volumes.
•Slight increase in per-unit non-fuel costs at Sunrise primarily due to higher repairs and maintenance, waste management and workforce costs, partially offset by higher sales volumes.
•Slight decrease in per-unit non-fuel costs at Christina Lake primarily due to higher sales volumes, partially offset by higher workforce, repairs and maintenance, and chemicals costs.
Depreciation, Depletion and Amortization
In the first quarter of 2026, Oil Sands DD&A expense increased $193 million compared with first quarter of 2025, primarily as a result of the MEG Acquisition.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 16 | ||||
Conventional
Financial Results
Three Months Ended March 31, | |||||||||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||||||||
| Gross Sales | |||||||||||||||||||||||||||||
External Sales | 568 | 443 | |||||||||||||||||||||||||||
Intersegment Sales | 469 | 501 | |||||||||||||||||||||||||||
| 1,037 | 944 | ||||||||||||||||||||||||||||
| Royalties | (18) | (20) | |||||||||||||||||||||||||||
| Revenues | 1,019 | 924 | |||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||
| Purchased Product | 623 | 535 | |||||||||||||||||||||||||||
Transportation and Blending | 85 | 90 | |||||||||||||||||||||||||||
| Operating | 110 | 127 | |||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | (10) | (1) | |||||||||||||||||||||||||||
| Operating Margin | 211 | 173 | |||||||||||||||||||||||||||
Unrealized (Gain) Loss on Risk Management | 4 | — | |||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 134 | 120 | |||||||||||||||||||||||||||
| Exploration Expense | — | — | |||||||||||||||||||||||||||
| (Income) Loss From Equity-Accounted Affiliates | (1) | — | |||||||||||||||||||||||||||
| Segment Income (Loss) | 74 | 53 | |||||||||||||||||||||||||||
Operating Results (1)
Three Months Ended March 31, | |||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||
Total Sales Volumes (MBOE/d) | 120.5 | 123.9 | |||||||||||||||||||||||||||
Realized Sales Price (2) ($/BOE) | |||||||||||||||||||||||||||||
Light Crude Oil ($/bbl) | 91.25 | 89.17 | |||||||||||||||||||||||||||
NGLs ($/bbl) | 53.98 | 64.91 | |||||||||||||||||||||||||||
Conventional Natural Gas ($/Mcf) | 4.31 | 4.11 | |||||||||||||||||||||||||||
| Production by Product | |||||||||||||||||||||||||||||
Light Crude Oil (Mbbls/d) | 6.0 | 5.2 | |||||||||||||||||||||||||||
NGLs (Mbbls/d) | 22.9 | 20.5 | |||||||||||||||||||||||||||
Conventional Natural Gas (MMcf/d) | 556.4 | 589.3 | |||||||||||||||||||||||||||
Total Production (MBOE/d) | 121.7 | 123.9 | |||||||||||||||||||||||||||
Conventional Natural Gas Production (percentage of total) | 76 | 79 | |||||||||||||||||||||||||||
Crude Oil and NGLs Production (percentage of total) | 24 | 21 | |||||||||||||||||||||||||||
Effective Royalty Rate (3) (percent) | 8.8 | 9.0 | |||||||||||||||||||||||||||
Netback (2) ($/BOE) | |||||||||||||||||||||||||||||
Realized Sales Price | 34.49 | 34.01 | |||||||||||||||||||||||||||
Royalties | 1.77 | 1.83 | |||||||||||||||||||||||||||
Transportation and Blending | 4.22 | 5.49 | |||||||||||||||||||||||||||
Operating | 9.60 | 10.92 | |||||||||||||||||||||||||||
Total Netback ($/BOE) | 18.90 | 15.77 | |||||||||||||||||||||||||||
(1)Reported production volumes, sales volumes, associated per-unit values and effective royalty rates include Cenovus’s 30 percent equity interest in the Duvernay joint venture.
(2)Contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
(3)Effective royalty rates are equal to royalty expense divided by product revenue, net of transportation expenses, excluding realized (gain) loss on risk management.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 17 | ||||
Revenues
Gross sales increased in the first quarter of 2026, compared with the first quarter of 2025, due to higher commodity trading volumes sourced from third parties and a higher Realized Sales Price, partially offset by lower sales volumes.
Price
Our Realized Sales Price increased slightly in the first quarter of 2026 compared with the same period in 2025, primarily reflecting increased sales volumes to U.S. destinations and a higher average NYMEX natural gas benchmark price, partially offset by lower AECO pricing. In the first quarter of 2026, 30 percent of our natural gas sales volumes were sold at U.S. destinations (2025 – 27 percent) where NYMEX natural gas benchmark prices increased to US$5.04 per Mcf (2025 – US$3.65 per Mcf). The increase was partially offset by AECO natural gas benchmark prices decreasing to $2.01 per Mcf (2025 – $2.17 per Mcf).
Production Volumes
Production volumes decreased slightly in the first quarter of 2026, compared with the same period in 2025. In the first quarter of 2026, we focused on liquids-rich production resulting in higher oil and NGL volumes, offset by lower natural gas volumes.
Royalties
The Conventional assets are subject to royalty regimes in Alberta and British Columbia. Royalties decreased in the first quarter of 2026 compared with the same period in 2025, primarily due to lower benchmark prices used to calculate our royalties. The effective royalty rate in the first quarter of 2026 was relatively consistent with the same period in 2025.
Expenses
Transportation
In the first quarter of 2026, transportation expenses and per-unit transportation expenses decreased compared with the first quarter of 2025, due to lower NGL delivery costs and natural gas tolls.
Operating
Primary drivers of operating expenses in the first quarter of 2026 were repairs and maintenance, workforce and property tax costs. Total operating expenses and per-unit operating expenses decreased compared with the first quarter of 2025, primarily due to lower repairs and maintenance costs.
Offshore
Financial Results
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||||||||||||||
| ($ millions) | Atlantic | Asia Pacific | Offshore | Atlantic | Asia Pacific | Offshore | |||||||||||||||||||||||||||||
| Gross Sales | |||||||||||||||||||||||||||||||||||
External Sales | 252 | 297 | 549 | 146 | 305 | 451 | |||||||||||||||||||||||||||||
Intersegment Sales | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| 252 | 297 | 549 | 146 | 305 | 451 | ||||||||||||||||||||||||||||||
Royalties | (2) | (23) | (25) | (2) | (23) | (25) | |||||||||||||||||||||||||||||
| Revenues | 250 | 274 | 524 | 144 | 282 | 426 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Purchased Product | 4 | — | 4 | — | — | — | |||||||||||||||||||||||||||||
Transportation and Blending | 7 | — | 7 | 6 | — | 6 | |||||||||||||||||||||||||||||
Operating | 82 | 29 | 111 | 64 | 25 | 89 | |||||||||||||||||||||||||||||
Operating Margin (1) | 157 | 245 | 402 | 74 | 257 | 331 | |||||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 129 | 130 | |||||||||||||||||||||||||||||||||
| Exploration Expense | 11 | 1 | |||||||||||||||||||||||||||||||||
| (Income) Loss from Equity-Accounted Affiliates | (15) | (8) | |||||||||||||||||||||||||||||||||
| Segment Income (Loss) | 277 | 208 | |||||||||||||||||||||||||||||||||
(1)Atlantic and Asia Pacific Operating Margin are non-GAAP financial measures. See the Specified Financial Measures Advisory of this MD&A.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 18 | ||||
Operating Results
Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Sales Volumes | |||||||||||||||||||||||
Atlantic (Mbbls/d) | 23.1 | 15.8 | |||||||||||||||||||||
Asia Pacific (MBOE/d) | |||||||||||||||||||||||
| China | 41.5 | 42.0 | |||||||||||||||||||||
Indonesia (1) | 15.6 | 15.2 | |||||||||||||||||||||
| Total Asia Pacific | 57.1 | 57.2 | |||||||||||||||||||||
Total Sales Volumes (MBOE/d) | 80.2 | 73.0 | |||||||||||||||||||||
| Production by Product | |||||||||||||||||||||||
Atlantic – Light Crude Oil (Mbbls/d) | 18.3 | 11.6 | |||||||||||||||||||||
Asia Pacific (1) | |||||||||||||||||||||||
NGLs (Mbbls/d) | 10.3 | 9.3 | |||||||||||||||||||||
Conventional Natural Gas (MMcf/d) | 281.2 | 287.2 | |||||||||||||||||||||
| Total Asia Pacific (MBOE/d) | 57.1 | 57.2 | |||||||||||||||||||||
| Total Production (MBOE/d) | 75.4 | 68.8 | |||||||||||||||||||||
Effective Royalty Rate (2) (percent) | |||||||||||||||||||||||
| Atlantic | 0.9 | 1.0 | |||||||||||||||||||||
Asia Pacific (1) | 11.3 | 12.6 | |||||||||||||||||||||
(1)Reported sales volumes, production volumes and royalty rates reflect Cenovus’s 40 percent equity interest in the HCML joint venture.
(2)Effective royalty rates are equal to royalty expense divided by product revenue, net of transportation expenses, excluding realized (gain) loss on risk management.
Netbacks (1)
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||
| ($/BOE, except where indicated) | Atlantic ($/bbl) | China | Indonesia | Total Offshore (2) | ||||||||||||||||||||||
Realized Sales Price | 117.24 | 79.38 | 58.75 | 86.27 | ||||||||||||||||||||||
Royalties | 1.03 | 6.02 | 14.51 | 6.24 | ||||||||||||||||||||||
| Transportation and Blending | 3.56 | — | — | 1.02 | ||||||||||||||||||||||
| Operating Expenses | 39.36 | 7.43 | 9.03 | 16.93 | ||||||||||||||||||||||
Netback | 73.29 | 65.93 | 35.21 | 62.08 | ||||||||||||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||
| ($/BOE, except where indicated) | Atlantic ($/bbl) | China | Indonesia | Total Offshore (2) | ||||||||||||||||||||||
Realized Sales Price | 102.63 | 81.01 | 64.65 | 82.26 | ||||||||||||||||||||||
Royalties | 1.04 | 6.13 | 19.44 | 7.81 | ||||||||||||||||||||||
| Transportation and Blending | 4.25 | — | — | 0.92 | ||||||||||||||||||||||
| Operating Expenses | 45.47 | 6.00 | 10.67 | 15.50 | ||||||||||||||||||||||
Netback | 51.87 | 68.88 | 34.54 | 58.03 | ||||||||||||||||||||||
(1)Contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
(2)Reported per-unit values reflect Cenovus’s 40 percent equity interest in the HCML joint venture.
Revenues
Gross sales increased in the first quarter of 2026, compared with the same period in 2025, primarily due to higher sales volumes and higher Realized Sales Prices in our Atlantic operations.
Price
Our Atlantic Realized Sales Price increased in the first quarter of 2026, compared with the first quarter of 2025, due to higher benchmark Brent pricing. The prices we receive for natural gas sold in Asia Pacific are set under long-term contracts.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 19 | ||||
Production Volumes
Atlantic production increased in the first quarter of 2026, compared with the same period in 2025, due to strong production from the White Rose field. In the first and second quarters of 2025, production at the White Rose field was ramping up following the completion of the SeaRose ALE project in the first quarter of 2025.
Asia Pacific production in the first quarter of 2026 was consistent with the same period in 2025.
Royalties
Atlantic royalties were consistent in the first quarter of 2026 compared with the first quarter of 2025. The Atlantic effective royalty rate was 0.9 percent in the first quarter of 2026 (2025 – one percent).
The Asia Pacific effective royalty rate decreased for the first quarter of 2026 compared with the same period in 2025, due to Indonesian government-issued gas price adjustments applied in the period.
Expenses
Transportation
Transportation expenses include the costs of transporting crude oil from the SeaRose and Terra Nova floating production, storage and offloading units (“FPSO”) to onshore terminals and storage costs. Transportation expenses for the three months ended March 31, 2026, increased to $7 million (2025 – $6 million), primarily due to higher Atlantic sales volumes.
Operating
Primary drivers of our Atlantic operating expenses in the first quarter of 2026 were repairs and maintenance, and workforce costs. Operating expenses increased compared with the same period in 2025, primarily due to higher sales volumes, and higher repairs and maintenance costs.
Per-unit operating expenses decreased compared with the first quarter of 2025, due to higher Atlantic sales volumes, partially offset by the increase in operating expenses, as discussed above.
Primary drivers of our China operating expenses in the first quarter of 2026 were repairs and maintenance, workforce and insurance costs. Per-unit operating expenses increased in the first quarter of 2026, compared with the same period in 2025, primarily due to higher repairs and maintenance, and workforce costs.
Primary drivers of our Indonesia operating expenses in the first quarter of 2026 were repairs and maintenance, and workforce costs. Per-unit operating expenses decreased compared with the same period in 2025, due to lower vessel and workforce costs.
DOWNSTREAM
Canadian Refining
Financial Results
Three Months Ended March 31, | |||||||||||||||||||||||
($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Revenues | 1,407 | 1,282 | |||||||||||||||||||||
| Purchased Product | 1,060 | 1,076 | |||||||||||||||||||||
Gross Margin (1) | 347 | 206 | |||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating | 146 | 138 | |||||||||||||||||||||
| Operating Margin | 201 | 68 | |||||||||||||||||||||
| Depreciation, Depletion and Amortization | 45 | 47 | |||||||||||||||||||||
| Segment Income (Loss) | 156 | 21 | |||||||||||||||||||||
(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 20 | ||||
Financial Results — Continued
| Three Months Ended March 31, | |||||||||||||||||||||||
($ millions, except where indicated) | 2026 | 2025 | |||||||||||||||||||||
| Gross Margin | 347 | 206 | |||||||||||||||||||||
Add (Deduct): | |||||||||||||||||||||||
Inventory Holding (Gain) Loss (1) | (47) | 3 | |||||||||||||||||||||
Adjusted Gross Margin (2) | 300 | 209 | |||||||||||||||||||||
Adjusted Refining Margin (3) ($/bbl) | 24.27 | 17.33 | |||||||||||||||||||||
(1)Inventory holding (gain) loss reflects the difference between the cost of volumes produced at current-period costs and the cost of volumes produced under the first-in, first-out (“FIFO”) or weighted average cost basis, as required by IFRS Accounting Standards.
(2)Non-GAAP 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. Revenues from the Upgrader, the Lloydminster Refinery and the commercial fuels business for the three months ended March 31, 2026, were $1.3 billion (2025 – $1.2 billion).
Revenues, Adjusted Gross Margin and Adjusted Refining Margin
Revenues increased in the first quarter of 2026 compared with the first quarter of 2025, due to higher refined product pricing, mainly driven by an increase in diesel pricing, and higher sales volumes. Sales from the Lloydminster Refinery are seasonal and increase during paving season, which typically runs from May through October each year.
Adjusted Gross Margin and Adjusted Refining Margin increased in the first quarter of 2026, compared with the first quarter of 2025, primarily due to the widening of the WTI-WCS differential, higher refined product pricing, as discussed above, and higher sales volumes.
Operating Results
Three Months Ended March 31, | |||||||||||||||||||||||
| (Mbbls/d, except where indicated) | 2026 | 2025 | |||||||||||||||||||||
Operable Capacity | 108.0 | 108.0 | |||||||||||||||||||||
Total Processed Inputs | 124.5 | 119.5 | |||||||||||||||||||||
| Crude Oil Unit Throughput | 115.3 | 111.9 | |||||||||||||||||||||
Crude Unit Utilization (percent) | 107 | 104 | |||||||||||||||||||||
Total Production | 132.5 | 126.5 | |||||||||||||||||||||
| Synthetic Crude Oil | 52.0 | 52.4 | |||||||||||||||||||||
| Asphalt | 17.8 | 16.6 | |||||||||||||||||||||
| Diesel | 16.9 | 15.5 | |||||||||||||||||||||
| Other | 40.3 | 37.7 | |||||||||||||||||||||
| Ethanol | 5.5 | 4.3 | |||||||||||||||||||||
During the first quarter of 2026, throughput and total production increased slightly compared with the same period in 2025, as our assets continue to run at, or above full capacity, reflecting high reliability.
In the first quarter of 2026, approximately 12 percent of our Oil Sands segment’s sales volumes were purchased by our Canadian Refining segment as a source of crude oil feedstock (2025 – 14 percent).
Operating Expenses (1)
| Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions, except where indicated) | 2026 | 2025 | |||||||||||||||||||||
| Operating Expenses – Upgrading and Refining | 125 | 116 | |||||||||||||||||||||
Per-Unit Operating Expenses (2) ($/bbl) | 11.16 | 10.81 | |||||||||||||||||||||
(1)Represents expenses associated with the Upgrader, the Lloydminster Refinery and the commercial fuels business.
(2)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.
Primary drivers of operating expenses were workforce, and repairs and maintenance.
In the first quarter of 2026, total operating expenses and per-unit operating expenses increased compared with the first quarter of 2025, mainly due to higher repairs and maintenance, including routine tank maintenance. The per-unit increase was partially offset by higher total processed inputs, compared with the first quarter of 2025.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 21 | ||||
U.S. Refining
Financial Results
Three Months Ended March 31, | |||||||||||||||||||||||
($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Revenues | 4,220 | 6,423 | |||||||||||||||||||||
| Purchased Product | 3,318 | 6,006 | |||||||||||||||||||||
Gross Margin (1) | 902 | 417 | |||||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating | 380 | 716 | |||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | (11) | 6 | |||||||||||||||||||||
| Operating Margin | 533 | (305) | |||||||||||||||||||||
| Unrealized (Gain) Loss on Risk Management | 30 | (8) | |||||||||||||||||||||
| Depreciation, Depletion and Amortization | 112 | 158 | |||||||||||||||||||||
| Segment Income (Loss) | 391 | (455) | |||||||||||||||||||||
(1)Non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions, except where indicated) | 2026 | 2025 | |||||||||||||||||||||
| Gross Margin | 902 | 417 | |||||||||||||||||||||
Add (Deduct): | |||||||||||||||||||||||
Inventory Holding (Gain) Loss (1) | (457) | 23 | |||||||||||||||||||||
Adjusted Gross Margin (2) | 445 | 440 | |||||||||||||||||||||
Adjusted Refining Margin (2) ($/bbl) | 13.74 | 8.41 | |||||||||||||||||||||
Weighted Average Crack Spread, Net of RINs (US$/bbl) | 8.79 | 9.46 | |||||||||||||||||||||
Weighted Average Crack Spread, Net of RINs (C$/bbl) | 12.06 | 13.58 | |||||||||||||||||||||
Adjusted Market Capture (2) (percent) | 114 | 62 | |||||||||||||||||||||
(1)Inventory holding (gain) loss reflects the difference between the cost of volumes produced at current-period costs and the cost of volumes produced under the FIFO or weighted average cost basis, as required by IFRS Accounting Standards.
(2)Non-GAAP financial measure or contains a non-GAAP financial measure. See the Specified Financial Measures Advisory of this MD&A.
Revenues
Revenues decreased in the first quarter of 2026, compared with the first quarter of 2025, primarily due to lower sales volumes as a result of the WRB Divestiture, partially offset by higher refined product pricing, mainly driven by strong distillate pricing.
Adjusted Gross Margin, Adjusted Refining Margin and Adjusted Market Capture
Adjusted Gross Margin increased in the first quarter of 2026, compared with the first quarter of 2025, primarily due to:
•Achieving safe and reliable operations across our refineries, while maximizing our ability to process heavy crude volumes and capture value from wider WTI-WCS differentials.
•Business improvement initiatives which began in 2025 and continued to deliver value into 2026, improving our capability to optimize our product yields as market dynamics shifted in a seasonally weaker gasoline pricing environment. This allowed us to benefit from the strong distillate pricing, as discussed above.
•Seasonal commercial and blending opportunities.
•Optimization across the portfolio provided greater margin through various regional synergies.
This was partially offset by the impact of the WRB Divestiture and a lower weighted average market crack spread, net of RINs. In the first quarter of 2026, the Group 3 3-2-1 crack spread increased four percent while the Chicago 3-2-1 crack spread increased 28 percent, compared with the first quarter of 2025. The increase in crack spreads was more than offset by an 83 percent increase in the average cost of RINs, compared with the same period in 2025.
Adjusted Refining Margin and Adjusted Market Capture increased in the first quarter of 2026, compared with the same period in 2025, due to the increase in Adjusted Gross Margin discussed above, and lower total processed inputs.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 22 | ||||
Operating Results
Three Months Ended March 31, | |||||||||||||||||||||||
| (Mbbls/d, except where indicated) | 2026 | 2025 | |||||||||||||||||||||
Operable Capacity (1) | 364.8 | 612.3 | |||||||||||||||||||||
| Total Processed Inputs | 359.9 | 581.0 | |||||||||||||||||||||
| Crude Oil Unit Throughput | 343.2 | 553.5 | |||||||||||||||||||||
| Heavy Crude Oil | 152.2 | 226.3 | |||||||||||||||||||||
| Light/Medium Crude Oil | 191.0 | 327.2 | |||||||||||||||||||||
Crude Unit Utilization (percent) | 94 | 90 | |||||||||||||||||||||
Total Refined Product Production | 376.8 | 595.9 | |||||||||||||||||||||
| Gasoline | 185.1 | 284.7 | |||||||||||||||||||||
Distillates (2) | 121.6 | 208.8 | |||||||||||||||||||||
| Asphalt | 16.9 | 25.7 | |||||||||||||||||||||
| Other | 53.2 | 76.7 | |||||||||||||||||||||
(1)Reported operable capacity reflects the impact of the WRB Divestiture completed on September 30, 2025.
(2)Includes diesel and jet fuel.
Throughput and refined product production decreased in the first quarter of 2026, compared with the same period in 2025, primarily due to the WRB Divestiture, partially offset by reliable operations across our assets.
Operating Expenses
Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions, except where indicated) | 2026 | 2025 | |||||||||||||||||||||
Operating Expenses | 380 | 716 | |||||||||||||||||||||
Per-Unit Operating Expenses (1) ($/bbl) | 11.74 | 13.69 | |||||||||||||||||||||
(1)Specified financial measure. See the Specified Financial Measures Advisory of this MD&A.
Primary drivers of operating expenses were workforce, and repairs and maintenance.
Overall, operating expenses decreased in the first quarter of 2026, compared with the first quarter of 2025, due to the WRB Divestiture.
Operating expenses and related per-unit metrics decreased across our operated assets in the first quarter of 2026, compared with the first quarter of 2025, primarily due to lower repairs and maintenance costs, partially offset by higher electricity costs.
CORPORATE AND ELIMINATIONS
Financial Results
Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 8 | (5) | |||||||||||||||||||||
| Unrealized (Gain) Loss on Risk Management | 55 | 38 | |||||||||||||||||||||
General and Administrative | 411 | 197 | |||||||||||||||||||||
| Finance Costs, Net | 194 | 136 | |||||||||||||||||||||
| Integration, Transaction and Other Costs | 32 | 2 | |||||||||||||||||||||
| Foreign Exchange (Gain) Loss, Net | 179 | — | |||||||||||||||||||||
| (Gain) Loss on Divestiture of Assets | (86) | — | |||||||||||||||||||||
Other (Income) Loss, Net | (38) | (6) | |||||||||||||||||||||
General and Administrative
Primary drivers of our general and administrative expense in the first quarter of 2026 were long-term incentive costs and workforce costs. General and administrative expense increased in the first quarter of 2026, compared with the same period in 2025, primarily due to higher long-term incentive costs, as our closing common share price increased to $36.92 on March 31, 2026, from $23.22 on December 31, 2025.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 23 | ||||
Finance Costs, Net
Net finance costs were higher in the first quarter of 2026, compared with the same period in 2025, primarily due to increased interest expense from higher average debt. Refer to the Liquidity and Capital Resources section of this MD&A for further details on long-term debt.
The annualized weighted average interest rate on outstanding debt for the three months ended March 31, 2026, was 4.4 percent (2025 – 4.5 percent).
Foreign Exchange (Gain) Loss, Net
Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Unrealized Foreign Exchange (Gain) Loss | 180 | 19 | |||||||||||||||||||||
| Realized Foreign Exchange (Gain) Loss | (1) | (19) | |||||||||||||||||||||
| 179 | — | ||||||||||||||||||||||
Unrealized foreign exchange losses were primarily due to the translation of U.S. dollar denominated debt. As at March 31, 2026, the Canadian dollar weakened slightly relative to the U.S. dollar as at December 31, 2025.
Income Taxes
Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Current Tax | |||||||||||||||||||||||
| Canada | 479 | 279 | |||||||||||||||||||||
| United States | 6 | — | |||||||||||||||||||||
| Asia Pacific | 54 | 45 | |||||||||||||||||||||
| Other International | 8 | 13 | |||||||||||||||||||||
| Total Current Tax Expense (Recovery) | 547 | 337 | |||||||||||||||||||||
| Deferred Tax Expense (Recovery) | (33) | (66) | |||||||||||||||||||||
| 514 | 271 | ||||||||||||||||||||||
For the three months ended March 31, 2026, we recorded current tax expense related to operations in all jurisdictions in which we operate. The increase in current tax expense is due to higher earnings compared with the same period in 2025. The effective tax rate for the first three months was 24.7 percent, relatively consistent with 24.0 percent in the first quarter of 2025.
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.
LIQUIDITY AND CAPITAL RESOURCES | ||
Our capital allocation framework enables us to preserve our balance sheet, provide flexibility in both high and low commodity price environments, and deliver value to shareholders.
We expect to fund our near-term cash requirements through cash from operating activities, the prudent use of our cash and cash equivalents, and other sources of liquidity. Our other sources of liquidity include draws on our committed credit facility, draws on our uncommitted demand facilities, and other corporate and financial opportunities, which provide timely access to funding to supplement cash flow. The cost and availability of borrowing, and access to sources of liquidity and capital are dependent on current credit ratings and market conditions.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 24 | ||||
Three Months Ended March 31, | |||||||||||||||||||||||
($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Cash From (Used In) | |||||||||||||||||||||||
| Operating Activities | 2,181 | 1,315 | |||||||||||||||||||||
| Investing Activities | (1,070) | (1,348) | |||||||||||||||||||||
| Net Cash Provided (Used) Before Financing Activities | 1,111 | (33) | |||||||||||||||||||||
| Financing Activities | (1,335) | (294) | |||||||||||||||||||||
| Effect of Foreign Exchange on Cash and Cash Equivalents | 59 | 2 | |||||||||||||||||||||
| Increase (Decrease) in Cash and Cash Equivalents | (165) | (325) | |||||||||||||||||||||
| March 31, | December 31, | ||||||||||||||||||||||
| As at ($ millions) | 2026 | 2025 | |||||||||||||||||||||
Cash and Cash Equivalents | 2,575 | 2,740 | |||||||||||||||||||||
Total Debt | 10,633 | 11,032 | |||||||||||||||||||||
Cash From (Used in) Operating Activities
In the first quarter of 2026, cash from operating activities increased compared with the same period in 2025, primarily due to increased Operating Margin, partially offset by changes in non-cash working capital and higher current tax expense. Non-cash working capital decreased cash from operating activities by $1.1 billion, primarily due to an increase in accounts receivable and inventories, partially offset by higher accounts payable and lower income tax receivable.
Cash From (Used in) Investing Activities
Cash used in investing activities decreased in the first quarter of 2026 compared with the same period in 2025, primarily due to higher proceeds from divestitures and lower acquisition capital. Cash used in investing activities primarily relates to capital investment.
Cash From (Used in) Financing Activities
In the first quarter of 2026, cash used in financing activities was $1.3 billion, compared with $294 million in the first quarter of 2025, primarily due to the repayment of $500 million under the term loan facility, higher share purchases under the Company’s NCIB, and the issuance of $150 million in short-term borrowings in the first quarter of 2025, compared with no issuances in the first quarter of 2026.
Working Capital
Working capital as at March 31, 2026, was $4.1 billion (December 31, 2025 – $3.6 billion). The increase was primarily driven by higher accounts receivable and inventories, partially offset by an increase in accounts payable.
We anticipate that we will continue to meet our payment obligations as they come due.
Short-Term Borrowings
As at March 31, 2026, the Company had uncommitted demand facilities of $1.5 billion (December 31, 2025 – $1.5 billion) in place, of which $1.4 billion may be drawn for general purposes, or the full amount may be available to issue letters of credit. There were no direct borrowings on our uncommitted demand facilities as at March 31, 2026, or December 31, 2025.
Long-Term Debt, Including Current Portion
| March 31, | December 31, | |||||||||||||
| As at ($ millions) | 2026 | 2025 | ||||||||||||
| Term Loan Facility | 2,200 | 2,700 | ||||||||||||
U.S. Dollar Denominated Senior Unsecured Notes | 5,988 | 5,887 | ||||||||||||
Canadian Dollar Senior Unsecured Notes | 2,450 | 2,450 | ||||||||||||
| Total Debt Principal | 10,638 | 11,037 | ||||||||||||
As at March 31, 2026, the Company had in place a $2.2 billion term loan facility maturing on February 28, 2029. In the first quarter of 2026, we repaid $500 million under the term loan facility. Subsequent to March 31, 2026, we repaid an additional $700 million under the term loan facility.
As at March 31, 2026, we were in compliance with all of the terms of our debt agreements, which includes the terms of our committed credit facility and term loan facility. We are required to maintain a debt to capitalization ratio, as defined in the debt agreements, not to exceed 65 percent. We are below this limit.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 25 | ||||
Available Sources of Liquidity
The following sources of liquidity are available as at March 31, 2026:
| ($ millions) | Maturity | Amount Available | |||||||||||||||||||||||||||
| Cash and Cash Equivalents | n/a | 2,575 | |||||||||||||||||||||||||||
Committed Credit Facility (1) | |||||||||||||||||||||||||||||
Revolving Credit Facility – Tranche A | September 19, 2029 | 3,300 | |||||||||||||||||||||||||||
Revolving Credit Facility – Tranche B | September 19, 2028 | 2,200 | |||||||||||||||||||||||||||
Uncommitted Demand Facilities (2) | n/a | 1,083 | |||||||||||||||||||||||||||
(1)No amounts were drawn on the committed credit facility as at March 31, 2026 (December 31, 2025– $nil).
(2)Represents amounts available for cash draws. Our uncommitted demand facilities include $1.5 billion, of which $1.4 billion may be drawn for general purposes, or the full amount can be available to issue letters of credit. As at March 31, 2026, there were outstanding letters of credit aggregating to $372 million (December 31, 2025 – $341 million) and no direct borrowings (December 31, 2025 – $nil).
As at March 31, 2026, the Company had in place a committed credit facility that consists of a $3.3 billion tranche maturing on September 19, 2029, and a $2.2 billion tranche maturing on September 19, 2028. As at March 31, 2026, no amount was drawn on the credit facility (December 31, 2025 – $nil).
Base Shelf Prospectus
On November 28, 2025, Cenovus filed a base shelf prospectus that allows the Company to offer, from time to time, debt securities, common shares, preferred shares, subscription receipts, warrants, share purchase contracts and units in Canada, the U.S. and elsewhere as permitted by law. The base shelf prospectus will expire in December 2028. Offerings under the base shelf prospectus are subject to market conditions on terms set forth in one or more prospectus supplements.
Financial Metrics
We monitor our capital structure and financing requirements using, among other things, Total Debt, the Net Debt to Adjusted EBITDA ratio, the Net Debt to Adjusted Funds Flow ratio and the Net Debt to Capitalization ratio. Refer to Note 12 of the interim Consolidated Financial Statements for further details, including definitions and calculations of these metrics.
| As at | March 31, 2026 | December 31, 2025 | |||||||||||||||
Net Debt to Adjusted EBITDA Ratio (times) | 0.7 | 0.9 | |||||||||||||||
Net Debt to Adjusted Funds Flow Ratio (times) | 0.8 | 0.9 | |||||||||||||||
Net Debt to Capitalization Ratio (percent) | 20 | 21 | |||||||||||||||
Our Net Debt to Adjusted EBITDA ratio and our Net Debt to Adjusted Funds Flow ratio targets are approximately 1.0 times and Net Debt at or below $4.0 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 or the strengthening or weakening of the Canadian dollar relative to the U.S. dollar. 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, steward working capital, 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. Our Net Debt to Adjusted EBITDA ratio, Net Debt to Adjusted Funds Flow ratio and Net Debt to Capitalization ratio as at March 31, 2026, decreased compared with December 31, 2025, primarily as a result of higher Operating Margin and lower Net Debt. See the Operating and Financial Results section of this MD&A for more information on changes in Operating Margin and Net Debt.
Share Capital and Stock-Based Compensation Plans
Our common shares are listed on the Toronto Stock Exchange and New York Stock Exchange. On March 31, 2026, Cenovus exercised its right to redeem all 10.7 million of the Company’s series 1 preferred shares and all 1.3 million of the Company’s series 2 preferred shares. The preferred shares were redeemed at a price of $25.00 per share, for a total of $300 million. Following the redemptions on March 31, 2026, the Company no longer has preferred shares outstanding within its capital structure.
As at March 31, 2026, there were approximately 1,875.0 million common shares outstanding (December 31, 2025 – 1,883.4 million common shares).
For the three months ended March 31, 2026, the employee benefit plan trust (the “Trust”), through an independent trustee, purchased 1.8 million common shares for a total of $51 million and distributed 3.6 million common shares for a total of $80 million under the employee benefit plan. As at March 31, 2026, there were 3.5 million common shares held by the Trust (December 31, 2025 – 5.3 million common shares). Refer to Note 15 of the interim Consolidated Financial Statements for further details.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 26 | ||||
The common share purchase warrants expired on January 1, 2026. Refer to Note 15 of the interim Consolidated Financial Statements for further details.
Refer to Note 17 of the interim Consolidated Financial Statements for further details on our stock option plans and our performance share unit, restricted share unit and deferred share unit plans. Our outstanding share data is as follows:
| As at May 1, 2026 | Units Outstanding (thousands) | Units Exercisable (thousands) | |||||||||
Common Shares | 1,868,318 | n/a | |||||||||
Stock Options | 10,591 | 4,125 | |||||||||
| Other Stock-Based Compensation Plans | 20,749 | 2,079 | |||||||||
Returns to Shareholders
For a full discussion of our returns to shareholders target, refer to the Liquidity and Capital Resources section of our 2025 annual MD&A.
In the first quarter of 2026, we returned $1.0 billion to common and preferred shareholders, including $379 million through common and preferred share dividends, $356 million through the purchase of 11.5 million common shares under our NCIB program and $300 million for the redemption of the Company’s series 1 and 2 preferred shares.
The allocation of Excess Free Funds Flow to shareholder returns may be accelerated, deferred or reallocated between quarters at Management’s discretion.
Dividends
Common Share Dividends
In the first quarter of 2026, we declared and paid base dividends of $377 million or $0.200 per common share (2025 – $327 million or $0.180 per common share).
On May 5, 2026, the Board declared a second quarter base dividend of $0.220 per common share, an increase of 10 percent from the first quarter dividend declared in February 2026. The dividend is payable on June 30, 2026, to common shareholders of record as at June 15, 2026.
The declaration of common share dividends is at the sole discretion of the Board and is considered quarterly.
Cumulative Redeemable Preferred Share Dividends
In the first quarter of 2026, the Company paid preferred share dividends of $2 million (2025 – $6 million).
Share Repurchases
We have an NCIB program to purchase up to 120.3 million common shares from November 11, 2025, to November 10, 2026.
Three Months Ended March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
Common Shares Purchased and Cancelled Under NCIB (millions of common shares) | 11.5 | 3.0 | |||||||||||||||||||||
Weighted Average Price per Common Share ($) | 30.35 | 20.68 | |||||||||||||||||||||
Purchase of Common Shares Under NCIB ($ millions) | 356 | 62 | |||||||||||||||||||||
From April 1, 2026, to May 1, 2026, the Company purchased an additional 7.3 million common shares for $264 million. As at May 1, 2026, the Company can further purchase up to 94.1 million common shares under the NCIB.
Contractual Commitments and Obligations
We have obligations for goods and services entered into in the normal course of business. Obligations that have original maturities of less than one year are excluded from our total commitments disclosed below. For further information, see Note 22 of the interim Consolidated Financial Statements.
Our total commitments were $39.4 billion as at March 31, 2026 (December 31, 2025 – $39.7 billion), of which $36.7 billion are for various transportation and storage commitments. Transportation commitments include $7.8 billion that are subject to regulatory approval or were approved but are not yet in service. Terms are up to 15 years on commencement.
As at March 31, 2026, our total commitments included commitments with Husky Midstream Limited Partnership (“HMLP”) of $1.8 billion related to long-term transportation and storage commitments (December 31, 2025 – $1.7 billion).
As at March 31, 2026, outstanding letters of credit issued as security for performance under certain contracts totaled $372 million (December 31, 2025 – $341 million).
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 27 | ||||
Legal Proceedings
We are involved in a limited number of legal claims associated with the normal course of operations. We believe that any liabilities that might arise from such matters, to the extent not provided for, are not likely to have a material effect on our interim Consolidated Financial Statements.
Transactions with Related Parties
Husky Midstream Limited Partnership
The Company holds a 35 percent interest in and is the operator of HMLP. The Company charges HMLP for construction and management services, and incurs costs for the use of HMLP’s pipeline systems, as well as transportation and storage services. Access fees and transportation and storage services are based on contractually agreed rates with HMLP.
The following table summarizes revenues and associated expenses related to HMLP:
Three Months Ended March 31, | |||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||
| Revenues from Construction and Management Services | 33 | 29 | |||||||||||||||||||||
| Transportation Expenses | 65 | 68 | |||||||||||||||||||||
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 2025 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, without limitation, 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, repurchase our shares, pay dividends to our shareholders and fulfill our obligations (including debt servicing requirements) and may materially affect the market price of our securities.
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 material accounting policies are reviewed annually by the Audit Committee of the Board. Further details on the basis of preparation and our material accounting policies can be found in the notes to the Consolidated Financial Statements for the year ended December 31, 2025.
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 critical judgments used in applying accounting policies and key sources of estimation uncertainty can be found in the notes to the Consolidated Financial Statements for the year ended December 31, 2025.
Update to Accounting Policies
Effective January 1, 2026, the Company adopted the amendments to IFRS 9, “Financial Instruments” (“IFRS 9”) and IFRS 7, “Financial Instruments: Disclosures” (“IFRS 7”). The amendments clarify the derecognition of financial liabilities and the classification of certain financial assets. The adoption of the amendments to IFRS 9 and IFRS 7 did not have a material impact on the Company’s interim Consolidated Financial Statements.
New Accounting Standards and Interpretations Not Yet Adopted
On April 9, 2024, the IASB issued IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”), which will replace International Accounting Standard 1, “Presentation of Financial Statements”. IFRS 18 will establish a revised structure for the Consolidated Statements of Comprehensive Income (Loss), including new defined subtotals, enhanced principles on aggregation and disaggregation, and additional disclosure requirements related to management-defined performance measures (“MPMs”).
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 28 | ||||
The objective of the standard is to improve comparability across entities and reporting periods. IFRS 18 will not impact recognition or measurement of income and expenses.
Cenovus has executed a parallel system environment to reflect the new presentation requirements. The changes will primarily reflect a re-mapping of line items on the Consolidated Statements of Comprehensive Income (Loss) to newly defined categories. Items such as foreign exchange gains and losses will require segregation. The primary impact on the Consolidated Statements of Cash Flows will be the movement of certain finance costs from operating activities to financing activities. The Company has also identified metrics anticipated to be defined as MPMs.
The Company will continue to evaluate the impacts until adoption on January 1, 2027. The standard will be applied retrospectively, with certain transition provisions.
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, 2026. 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, 2026.
On November 13, 2025, Cenovus completed the MEG Acquisition. As permitted by, and in accordance with, National Instrument 52‑109, “Certification and Disclosure in Issuers’ Annual and Interim Filings”, and guidance issued by the U.S. Securities and Exchange Commission, Management has limited the scope and design of ICFR and DC&P to exclude the controls, policies and procedures in respect of the business acquired from MEG. Such scope limitation is primarily due to the time required for Management to assess the ICFR and DC&P relating to the business acquired from MEG in a manner consistent with our other operations. Further integration will take place throughout the remainder of 2026 as processes and systems align.
Assets attributable to MEG as at March 31, 2026, represented approximately 15 percent of Cenovus’s total assets, and revenues attributable to MEG for the period of January 1, 2026, to March 31, 2026, represented approximately nine percent of Cenovus’s total revenues for the three months ended March 31, 2026.
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.
ADVISORY | ||
Oil and Gas Information
Barrels of Oil Equivalent – natural gas volumes are 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.
Light crude oil – Light crude oil corresponds to light crude oil and medium crude oil combined as defined by National Instrument 51-101 “Standards of Disclosure for Oil and Gas Activities” (“NI 51-101”). Cenovus does not produce medium crude oil.
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 “allocate”, “anticipate”, “believe”, “commit”, “continue”, “could”, “deliver”, “expect”, “F”, “focus”, “grow”, “maintain”, “may”, “maximize”, “mitigate”, “on track”, “objective”, “ongoing”, “opportunities”, “optimize”, “plan”, “potential”, “priority”, “progress”, “steward”, “target”, and “will”, or similar expressions and includes suggestions of future outcomes, including, but not limited to, statements about: our strategic objectives; shareholder returns; commitment to safety and strengthening our safety record while maintaining reliable operations throughout our portfolio; capital allocation framework enabling us to preserve our balance sheet, provide flexibility in both high and low commodity price environments and deliver value to shareholders; our physically and economically integrated upstream and downstream operations helping us mitigate the impact of volatility in light-heavy crude oil price
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 29 | ||||
differentials and contribute to our net earnings by capturing value from crude oil, natural gas and NGLs production through the sale of finished products such as transportation fuels; market and commodity price volatility and stability; price alignment and volatility management strategies; dividends; liquidity; funding our near-term cash requirements through cash from operating activities, the prudent use of our cash and cash equivalents, and other sources of liquidity; our 2026 corporate guidance; factors influencing commodity price outlook; the impact of the global trade war and geopolitical tensions, including the closure of the Strait of Hormuz; capturing on opportunities from changing market conditions; allocating Excess Free Funds Flow to shareholder returns; progressing key growth projects, including continued development of Christina Lake North expansion project with production to come online in the second quarter of 2026, commissioning work at the Foster Creek Amine Claus project, and timing for first oil at West White Rose; heavy oil refining capacity allows us to capture value from both the WTI-WCS differential for Canadian crude oil and spreads on refined products monitoring market fundamentals and optimizing run rates at our refineries; safe and reliable operations; being best-in-class operators; maintaining a strong balance sheet; costs; margins; provision for income taxes; funding near-term cash requirements; credit ratings; meeting payment obligations; general outlook for crude oil and refined product prices; price volatility and geopolitical risks; impact of current and future economic arrangements between Canada and the U.S. including tariffs and other measures and countermeasures and responses thereto on market access and transportation; Net Debt to Adjusted EBITDA, Net Debt to Adjusted Funds Flow and Net Debt to Capitalization ratios; maintaining capital discipline to ensure sufficient liquidity; financial resilience; liabilities from legal proceedings; transportation and storage commitments; and the Company’s outlook for commodities and the Canadian dollar, the factors that affect such outlook, and the influences and effects on Cenovus.
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 bitumen, crude oil and natural gas, NGLs, condensate and refined products prices, and light-heavy and light-medium crude oil price differentials; the Company’s ability to realize the anticipated benefits of acquisitions; the accuracy of any assessments undertaken in connection with acquisitions; forecast production and crude throughput volumes and timing thereof; forecast prices and costs, 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, title or rights claims, royalty regimes, interest rates, inflation, foreign exchange rates, global economic activity, competitive conditions, trade sanctions, restrictive trade measures or countermeasures, and the supply and demand for bitumen, crude oil and natural gas, NGLs, condensate and refined products and 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, third-party actions, 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 Company’s ability to use financial risk management activities and physical positions to manage its exposure to fluctuations in commodity prices and, foreign exchange and interest rates, optimize supply costs or sales of production; the Company’s ability to use fixed-price commitments for the purchase or sale of commodities; the sufficiency of cash balances, 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 and development plans and dividends, including any increase thereto; 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 its 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 global supply factors and heavy crude oil processing capacity, as long as supply does not exceed Canadian crude oil export capacity; the Company’s ability to produce from oil sands facilities on an unconstrained basis; estimates of quantities of oil, bitumen, NGLs 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 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 divestitures, 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 sustainability commitments and the Oil Sands Alliance Pathways project, and the commercial viability and scalability of related technology and products; expected benefits of investments in sustainability focus areas; collaboration with the government, Oil Sands Alliance and other industry organizations; market and business conditions; forecast inflation and other assumptions inherent in the Company’s 2026 guidance available on cenovus.com and as set out below; and other risks and uncertainties described from time to time in the filings the Company makes with securities regulatory authorities.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 30 | ||||
2026 guidance dated December 10, 2025, and available on cenovus.com, assumes: Brent prices of US$64.00 per barrel, WTI prices of US$60.00 per barrel; WCS of US$47.50 per barrel; Differential WTI-WCS of US$12.50 per barrel; AECO natural gas prices of $2.50 per Mcf; Chicago 3-2-1 crack spread of US$20.00 per barrel; RINs of US$6.00 per barrel; and an exchange rate of $0.72 US$/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 Company’s ability to realize the anticipated benefits of acquisitions in a timely manner or at all; the Company’s ability to successfully integrate acquired business with its own in a timely and cost effective manner or at all; unforeseen or underestimated liabilities associated with acquisitions; risks associated with acquisitions and divestitures; 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 sustainability commitments and the Oil Sands Alliance and the commercial viability and scalability of related technology and products; the effect of new significant shareholders; volatility of and other assumptions regarding commodity prices; the duration and impact of any market downturn; the Company’s ability to integrate upstream and downstream operations to help mitigate the impact of volatility in light-heavy crude oil differentials and contribute to its net earnings; foreign exchange risk, including related to agreements denominated in foreign currencies; the Company’s continued liquidity being sufficient to sustain operations through a prolonged market downturn; WTI-WCS differential at Hardisty does not remain largely tied to global supply factors and heavy crude processing capacity; 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 the Company’s outlook for commodity prices and currency and interest rates; changes in laws or enforcement of existing laws, exchange rate fluctuations, trade disputes, trade agreements or treaties, new or increased tariffs, economic sanctions and other restrictive trade measures or countermeasures, and responses thereto; 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 ability to finance growth and sustaining capital expenditures; the ability to complete and optimize drilling, completion, tie in and infrastructure projects; the ability of the Company to ramp-up activities at its refineries on its anticipated timelines; 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; tax audits and reassessments; the accuracy of the Company’s reserves, future production and future net revenue estimates; the accuracy of factors influencing decisions on the priority and timing of development of undeveloped reserves; potential disruptions and risks associated with the adoption, development and integration of AI; 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 refining processes; the occurrence of unexpected events resulting in operational interruptions, including at facilities operated by our partners or third parties, such as blowouts, fires, explosions, railcar incidents or derailments, aviation incidents, iceberg collisions, 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 and pandemics; and catastrophic events, including, but not limited to, war, adverse sea conditions, extreme weather events, natural disasters, acts of activism, 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 downstream operations 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 licence to operate and litigation related thereto; legal challenges or opposition to infrastructure projects associated with Indigenous title or other rights claims; unexpected cost increases or technical difficulties in operating, constructing or modifying refining 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
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 31 | ||||
caused by constraints in the pipeline system or storage capacity; availability of, and the Company’s ability to attract and retain, critical talent and integrate new personnel acquired in transactions; 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; climate change-related regulatory, climactic transition risks; failure to achieve our sustainability goals, or a perception among key stakeholders that our actions or goals are insufficient or unattainable; 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; OPEC+ policy; actions of OPEC and non-OPEC members, including compliance or non-compliance with agreed upon quotas and decisions to impose production quotas; 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 attempting to achieve goals for sustainability focus areas may have a negative impact on our existing business, growth plans and future results from operations, or that the benefits may be less than expected.
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 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 the Company’s most recently filed annual MD&A, and the risk factors described in other documents the Company files from time to time with securities regulatory authorities in Canada, available on SEDAR+ at sedarplus.ca, 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.
ABBREVIATIONS AND DEFINITIONS
Abbreviations
The following abbreviations and definitions are used in this document:
| Crude Oil and NGLs | Natural Gas | Other | |||||||||||||||
| bbl | barrel | Mcf | thousand cubic feet | BOE | barrel of oil equivalent | ||||||||||||
| Mbbls/d | thousand barrels per day | MMcf | million cubic feet | MBOE/d | thousand barrels of oil equivalent per day | ||||||||||||
| MMbbls | million barrels | MMcf/d | million cubic feet per day | MMBOE | million barrels of oil equivalent | ||||||||||||
| WCS | Western Canadian Select | Bcf | billion cubic feet | DD&A | depreciation, depletion and amortization | ||||||||||||
| WTI | West Texas Intermediate | GHG | greenhouse gas | ||||||||||||||
| FPSO | floating production, storage and offloading vessel | ||||||||||||||||
| NCIB | normal course issuer bid | ||||||||||||||||
| AECO | Alberta Energy Company | ||||||||||||||||
| NYMEX | New York Mercantile Exchange | ||||||||||||||||
| OPEC | Organization of Petroleum Exporting Countries | ||||||||||||||||
| OPEC+ | OPEC and a group of 11 non-OPEC members | ||||||||||||||||
| PADD II | Petroleum Administration for Defense District II | ||||||||||||||||
| USGC | U.S. Gulf Coast | ||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 32 | ||||
SPECIFIED FINANCIAL MEASURES
Certain financial measures in this document do not have a standardized meaning as prescribed by IFRS Accounting Standards including Operating Margin, Operating Margin by asset, Adjusted Funds Flow, Adjusted Funds Flow Per Share – Basic, Adjusted Funds Flow Per Share – Diluted, Free Funds Flow, Excess Free Funds Flow, Realized Sales Price, Conventional, Offshore and Asia Pacific Per-Unit Operating Expenses, Netbacks (including the total Netback per BOE), Gross Margin, Adjusted Gross Margin, Adjusted Refining Margin and Adjusted Market Capture.
These measures may not be comparable to similar measures presented by other issuers. These measures are 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 Accounting Standards. The definition and reconciliation, if applicable, of each specified financial measure is presented in this Advisory and may also be presented in the Operating and Financial Results section of this MD&A. Refer to the Specified Financial Measures Advisory of the relevant period’s MD&A for reconciliations of Operating Margin, Adjusted Funds Flow, Free Funds Flow and Excess Free Funds Flow for prior period information from 2025 and 2024 that is not found below.
Non-GAAP Financial Measures and Non-GAAP Ratios
Operating Margin
Operating Margin and Operating Margin by asset are non-GAAP financial measures, and Operating Margin for upstream or downstream operations 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 expenses, 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. The following tables provide a reconciliation to our interim Consolidated Financial Statements.
Operating Margin
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||
| ($ millions) | Upstream (1) | Downstream (1) | Total | ||||||||||||||||||||||||||||||||
| Gross Sales | |||||||||||||||||||||||||||||||||||
| External Sales | 8,009 | 6,798 | 5,330 | 7,407 | 13,339 | 14,205 | |||||||||||||||||||||||||||||
Intersegment Sales | 2,361 | 2,454 | 297 | 298 | 2,658 | 2,752 | |||||||||||||||||||||||||||||
| 10,370 | 9,252 | 5,627 | 7,705 | 15,997 | 16,957 | ||||||||||||||||||||||||||||||
Royalties | (983) | (906) | — | — | (983) | (906) | |||||||||||||||||||||||||||||
| Revenues | 9,387 | 8,346 | 5,627 | 7,705 | 15,014 | 16,051 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
Purchased Product | 1,244 | 1,167 | 4,378 | 7,082 | 5,622 | 8,249 | |||||||||||||||||||||||||||||
Transportation and Blending | 3,375 | 3,247 | — | — | 3,375 | 3,247 | |||||||||||||||||||||||||||||
Operating | 1,047 | 893 | 526 | 854 | 1,573 | 1,747 | |||||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 13 | (9) | (11) | 6 | 2 | (3) | |||||||||||||||||||||||||||||
| Operating Margin | 3,708 | 3,048 | 734 | (237) | 4,442 | 2,811 | |||||||||||||||||||||||||||||
(1)Found in Note 1 of the interim Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 33 | ||||
Operating Margin by Asset
Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||||||||
| ($ millions) | Atlantic | Asia Pacific | Offshore (1) | ||||||||||||||||||||||||||||||||
| Gross Sales | 252 | 297 | 549 | ||||||||||||||||||||||||||||||||
Royalties | (2) | (23) | (25) | ||||||||||||||||||||||||||||||||
| Revenues | 250 | 274 | 524 | ||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Purchased Product | 4 | — | 4 | ||||||||||||||||||||||||||||||||
Transportation and Blending | 7 | — | 7 | ||||||||||||||||||||||||||||||||
Operating | 82 | 29 | 111 | ||||||||||||||||||||||||||||||||
| Operating Margin | 157 | 245 | 402 | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2025 | |||||||||||||||||||||||||||||||||||
| ($ millions) | Atlantic | Asia Pacific | Offshore (1) | ||||||||||||||||||||||||||||||||
| Gross Sales | 146 | 305 | 451 | ||||||||||||||||||||||||||||||||
Royalties | (2) | (23) | (25) | ||||||||||||||||||||||||||||||||
| Revenues | 144 | 282 | 426 | ||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Purchased Product | — | — | — | ||||||||||||||||||||||||||||||||
Transportation and Blending | 6 | — | 6 | ||||||||||||||||||||||||||||||||
Operating | 64 | 25 | 89 | ||||||||||||||||||||||||||||||||
| Operating Margin | 74 | 257 | 331 | ||||||||||||||||||||||||||||||||
(1)Found in Note 1 of the interim Consolidated Financial Statements.
Adjusted Funds Flow, Free Funds Flow and Excess 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, in total and on a per-share basis. Adjusted Funds Flow is defined as cash from (used in) operating activities, excluding settlement of decommissioning liabilities and net change in operating non-cash working capital. Operating non-cash working capital is composed of accounts receivable and accrued revenues, income tax receivable, inventories (excluding non-cash inventory write-downs and reversals), accounts payable and accrued liabilities, and income tax payable. Adjusted Funds Flow Per Share – Basic is defined as Adjusted Funds Flow divided by the basic weighted average number of shares. Adjusted Funds Flow Per Share – Diluted is defined as Adjusted Funds Flow divided by the diluted weighted average number of shares.
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 operating non-cash working capital, minus capital investment.
Excess Free Funds Flow is a non-GAAP financial measure used by the Company to deliver shareholder returns and allocate capital according to our shareholder returns and capital allocation framework. Excess Free Funds Flow is defined as Free Funds Flow minus base dividends paid on common shares, dividends paid on preferred shares, net purchases of common shares under the employee benefit plan, other uses of cash (including settlement of decommissioning liabilities and principal repayment of leases), and expenditures for acquisitions net of cash acquired, plus proceeds from, or payments related to, divestitures.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 34 | ||||
| Three Months Ended March 31, | |||||||||||||||||||||||||||||
| ($ millions) | 2026 | 2025 | |||||||||||||||||||||||||||
| Cash From (Used in) Operating Activities | 2,181 | 1,315 | |||||||||||||||||||||||||||
| (Add) Deduct: | |||||||||||||||||||||||||||||
Settlement of Decommissioning Liabilities | (53) | (36) | |||||||||||||||||||||||||||
| Net Change in Non-Cash Working Capital | (1,143) | (861) | |||||||||||||||||||||||||||
| Adjusted Funds Flow | 3,377 | 2,212 | |||||||||||||||||||||||||||
Capital Investment | 1,170 | 1,229 | |||||||||||||||||||||||||||
Free Funds Flow | 2,207 | 983 | |||||||||||||||||||||||||||
| Add (Deduct): | |||||||||||||||||||||||||||||
| Base Dividends Paid on Common Shares | (377) | (327) | |||||||||||||||||||||||||||
| Dividends Paid on Preferred Shares | (2) | (6) | |||||||||||||||||||||||||||
| Purchase of Common Shares Under Employee Benefit Plan | (51) | (58) | |||||||||||||||||||||||||||
Settlement of Decommissioning Liabilities | (53) | (36) | |||||||||||||||||||||||||||
| Principal Repayment of Leases | (90) | (83) | |||||||||||||||||||||||||||
| Acquisitions, Net of Cash Acquired | (10) | (100) | |||||||||||||||||||||||||||
| Proceeds From Divestitures | 99 | — | |||||||||||||||||||||||||||
Excess Free Funds Flow | 1,723 | 373 | |||||||||||||||||||||||||||
Gross Margin, Adjusted Gross Margin, Adjusted Refining Margin and Adjusted Market Capture
Gross Margin and Adjusted Gross Margin are non-GAAP financial measures that are used to evaluate the performance of our downstream operations. We define Gross Margin as revenues less purchased product and Adjusted Gross Margin as revenues less purchased product, excluding the impact of inventory holding gains or losses.
Inventory holding gains or losses reflects the difference between the cost of volumes produced at current-period costs, which is an indication of current market conditions, and the cost of volumes produced under the FIFO or weighted average cost basis as required by IFRS Accounting Standards, which generally reflects the market conditions at the time feedstock was purchased. The purchase and sale of inventories creates a timing difference that could be anywhere from several weeks to several months. This measure is an estimate of the impact of current-period costs to FIFO or weighted average cost, and assumes that all opening volumes are sold in the current period. Cenovus uses inventory holding gains or losses to analyze the performance of our assets and increase comparability with refining peers.
Adjusted Refining Margin and Adjusted Market Capture contain non-GAAP financial measures. Adjusted Refining Margin is used to evaluate our downstream operations after adjusting for inventory holding gains or losses. Adjusted Market Capture is used in our U.S. Refining segment to provide an indication of margin captured relative to what was available in the market based on widely-used benchmarks. These measures are useful to consistently measure the performance of our downstream operations.
We define Adjusted Refining Margin as Adjusted Gross Margin divided by total processed inputs and Adjusted Market Capture as Adjusted Refining Margin divided by the weighted average 3-2-1 market benchmark crack, net of RINs, expressed as a percentage. The weighted average crack spread, net of RINs, is calculated on Cenovus’s operable capacity-weighted average of the Chicago and Group 3 3-2-1 benchmark market crack spreads, net of RINs.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 35 | ||||
Canadian Refining
Three Months Ended March 31, 2026 | |||||||||||||||||||||||||||||
($ millions, except where indicated) | Lloydminster Upgrader and Lloydminster Refinery Total | Other (1) | Total Canadian Refining (2) | ||||||||||||||||||||||||||
Revenues | 1,327 | 80 | 1,407 | ||||||||||||||||||||||||||
| Purchased Product | 1,008 | 52 | 1,060 | ||||||||||||||||||||||||||
| Gross Margin | 319 | 28 | 347 | ||||||||||||||||||||||||||
Add (Deduct): | |||||||||||||||||||||||||||||
| Inventory Holding (Gain) Loss | (47) | — | (47) | ||||||||||||||||||||||||||
| Adjusted Gross Margin | 272 | 28 | 300 | ||||||||||||||||||||||||||
Total Processed Inputs (Mbbls/d) | 124.5 | ||||||||||||||||||||||||||||
Adjusted Refining Margin ($/bbl) | 24.27 | ||||||||||||||||||||||||||||
(1)Includes ethanol operations and crude-by-rail operations.
(2)Revenues and purchased product are found in Note 1 of the interim Consolidated Financial Statements.
Three Months Ended March 31, 2025 | |||||||||||||||||
($ millions, except where indicated) | Lloydminster Upgrader and Lloydminster Refinery Total | Other (1) | Total Canadian Refining (2) | ||||||||||||||
Revenues | 1,221 | 61 | 1,282 | ||||||||||||||
| Purchased Product | 1,037 | 39 | 1,076 | ||||||||||||||
| Gross Margin | 184 | 22 | 206 | ||||||||||||||
Add (Deduct): | |||||||||||||||||
| Inventory Holding (Gain) Loss | 3 | — | 3 | ||||||||||||||
| Adjusted Gross Margin | 187 | 22 | 209 | ||||||||||||||
Total Processed Inputs (Mbbls/d) | 119.5 | ||||||||||||||||
Adjusted Refining Margin ($/bbl) | 17.33 | ||||||||||||||||
(1)Includes ethanol operations and crude-by-rail operations.
(2)Revenues and purchased product are found in Note 1 of the interim Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 36 | ||||
U.S. Refining
| Three Months Ended March 31, | ||||||||||||||||||||||||||
($ millions, except where indicated) | 2026 | 2025 | ||||||||||||||||||||||||
Revenues (1) | 4,220 | 6,423 | ||||||||||||||||||||||||
Purchased Product (1) | 3,318 | 6,006 | ||||||||||||||||||||||||
| Gross Margin | 902 | 417 | ||||||||||||||||||||||||
Add (Deduct): | ||||||||||||||||||||||||||
| Inventory Holding (Gain) Loss | (457) | 23 | ||||||||||||||||||||||||
| Adjusted Gross Margin | 445 | 440 | ||||||||||||||||||||||||
Total Processed Inputs (Mbbls/d) | 359.9 | 581.0 | ||||||||||||||||||||||||
Adjusted Refining Margin ($/bbl) | 13.74 | 8.41 | ||||||||||||||||||||||||
Operable Capacity (Mbbls/d) | 364.8 | 612.3 | ||||||||||||||||||||||||
Operable Capacity by Regional Benchmark (percent) | ||||||||||||||||||||||||||
Chicago 3-2-1 Crack Spread Weighting | 88 | 81 | ||||||||||||||||||||||||
| Group 3 3-2-1 Crack Spread Weighting | 12 | 19 | ||||||||||||||||||||||||
Benchmark Prices and Exchange Rate | ||||||||||||||||||||||||||
Chicago 3-2-1 Crack Spread (US$/bbl) | 17.55 | 13.68 | ||||||||||||||||||||||||
Group 3 3-2-1 Crack Spread (US$/bbl) | 17.16 | 16.48 | ||||||||||||||||||||||||
RINs (US$/bbl) | 8.71 | 4.76 | ||||||||||||||||||||||||
US$ per C$1 – Average | 0.729 | 0.697 | ||||||||||||||||||||||||
Weighted Average Crack Spread, Net of RINs ($/bbl) | 12.06 | 13.58 | ||||||||||||||||||||||||
Adjusted Market Capture (percent) | 114 | 62 | ||||||||||||||||||||||||
(1)Found in Note 1 of the interim Consolidated Financial Statements.
Netback Reconciliations and Realized Sales Price
Netback is a non-GAAP financial measure commonly used in the oil and gas industry to assist in measuring operating performance. Our Netback calculation is substantially aligned with the definition found in the Canadian Oil and Gas Evaluation Handbook. Netback is defined as gross sales less royalties, transportation and blending, and operating expenses. Netbacks do not reflect non-cash write-downs or reversals of product inventory until it is realized when the product is sold and exclude risk management activities. Condensate or butane (diluent) is blended with crude oil to transport it to market. Netback per barrel of oil equivalent contains a non-GAAP measure. Netbacks per barrel of oil equivalent reflect our margin on a per-barrel of oil equivalent basis. Per-unit measures are divided by sales volumes.
Netback calculations reflect our proportionate share of revenues and expenses for joint ventures that are accounted for using the equity method of accounting. Offshore and Asia Pacific Netbacks include HCML, and the Conventional Netback includes Duvernay, resulting in non-GAAP measures when line items are presented independently and containing non-GAAP measures when presented on a per-unit basis.
Realized Sales Price contains a non-GAAP measure. It includes our gross sales, purchased diluent costs and profit from optimization activities, such as cogeneration, third-party processing and trading.
The following tables provide a reconciliation of Netback to Operating Margin found in our interim Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 37 | ||||
Oil Sands
| Basis of Netback Calculation | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2026 ($ millions) | Foster Creek | Christina Lake | Sunrise | Lloydminster (1) | Total Oil Sands (2) | |||||||||||||||||||||||||||
| Gross Sales | 1,756 | 2,440 | 434 | 864 | 5,494 | |||||||||||||||||||||||||||
| Royalties | (333) | (519) | (11) | (71) | (934) | |||||||||||||||||||||||||||
| Revenues | 1,423 | 1,921 | 423 | 793 | 4,560 | |||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
| Purchased Product | — | — | — | — | — | |||||||||||||||||||||||||||
| Transportation and Blending | 251 | 253 | 72 | 34 | 610 | |||||||||||||||||||||||||||
| Operating | 210 | 290 | 94 | 226 | 820 | |||||||||||||||||||||||||||
| Netback | 962 | 1,378 | 257 | 533 | 3,130 | |||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 23 | |||||||||||||||||||||||||||||||
| Operating Margin | 3,107 | |||||||||||||||||||||||||||||||
| Basis of Netback Calculation | Adjustments | ||||||||||||||||||||||
Three Months Ended March 31, 2026 ($ millions) | Total Oil Sands (2) | Condensate | Third-party Sourced | Other (3) | Total Oil Sands (4) | ||||||||||||||||||
| Gross Sales | 5,494 | 2,629 | 547 | 114 | 8,784 | ||||||||||||||||||
| Royalties | (934) | — | — | (6) | (940) | ||||||||||||||||||
| Revenues | 4,560 | 2,629 | 547 | 108 | 7,844 | ||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Purchased Product | — | — | 547 | 70 | 617 | ||||||||||||||||||
| Transportation and Blending | 610 | 2,629 | — | 44 | 3,283 | ||||||||||||||||||
| Operating | 820 | — | — | 6 | 826 | ||||||||||||||||||
| Netback | 3,130 | — | — | (12) | 3,118 | ||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 23 | — | — | — | 23 | ||||||||||||||||||
| Operating Margin | 3,107 | — | — | (12) | 3,095 | ||||||||||||||||||
(1)Includes Lloydminster thermal and Lloydminster conventional heavy oil assets.
(2)Includes bitumen and heavy oil.
(3)Other includes reclassification of costs primarily related to third-party cogeneration and transportation and blending.
(4)These amounts, excluding Netback, are found in Note 1 of the interim Consolidated Financial Statements.
| Basis of Netback Calculation | ||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2025 ($ millions) | Foster Creek | Christina Lake | Sunrise | Lloydminster (1) | Total Oil Sands (2) | |||||||||||||||||||||||||||
| Gross Sales | 1,717 | 1,619 | 389 | 910 | 4,635 | |||||||||||||||||||||||||||
| Royalties | (342) | (398) | (20) | (99) | (859) | |||||||||||||||||||||||||||
| Revenues | 1,375 | 1,221 | 369 | 811 | 3,776 | |||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
| Purchased Product | — | — | — | — | — | |||||||||||||||||||||||||||
| Transportation and Blending | 312 | 132 | 80 | 39 | 563 | |||||||||||||||||||||||||||
| Operating | 193 | 189 | 78 | 213 | 673 | |||||||||||||||||||||||||||
| Netback | 870 | 900 | 211 | 559 | 2,540 | |||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | (8) | |||||||||||||||||||||||||||||||
| Operating Margin | 2,548 | |||||||||||||||||||||||||||||||
(1)Includes Lloydminster thermal and Lloydminster conventional heavy oil assets.
(2)Includes bitumen and heavy oil.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 38 | ||||
| Basis of Netback Calculation | Adjustments | ||||||||||||||||||||||
Three Months Ended March 31, 2025 ($ millions) | Total Oil Sands (1) | Condensate | Third-party Sourced | Other (2) | Total Oil Sands (3) | ||||||||||||||||||
| Gross Sales | 4,635 | 2,575 | 553 | 94 | 7,857 | ||||||||||||||||||
| Royalties | (859) | — | — | (2) | (861) | ||||||||||||||||||
| Revenues | 3,776 | 2,575 | 553 | 92 | 6,996 | ||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Purchased Product | — | — | 553 | 79 | 632 | ||||||||||||||||||
| Transportation and Blending | 563 | 2,575 | — | 13 | 3,151 | ||||||||||||||||||
| Operating | 673 | — | — | 4 | 677 | ||||||||||||||||||
| Netback | 2,540 | — | — | (4) | 2,536 | ||||||||||||||||||
| Realized (Gain) Loss on Risk Management | (8) | — | — | — | (8) | ||||||||||||||||||
| Operating Margin | 2,548 | — | — | (4) | 2,544 | ||||||||||||||||||
(1)Includes bitumen and heavy oil.
(2)Other includes construction, transportation and blending.
(3)These amounts, excluding Netback, are found in Note 1 of the interim Consolidated Financial Statements.
Conventional
| Basis of Netback Calculation | Adjustments | |||||||||||||||||||
Three Months Ended March 31, 2026 ($ millions) | Conventional (1) | Third-party Sourced | Other (1) (2) | Conventional (3) | ||||||||||||||||
| Gross Sales | 374 | 623 | 40 | 1,037 | ||||||||||||||||
| Royalties | (19) | — | 1 | (18) | ||||||||||||||||
| Revenues | 355 | 623 | 41 | 1,019 | ||||||||||||||||
| Expenses | ||||||||||||||||||||
| Purchased Product | — | 623 | — | 623 | ||||||||||||||||
| Transportation and Blending | 46 | — | 39 | 85 | ||||||||||||||||
| Operating | 104 | — | 6 | 110 | ||||||||||||||||
| Netback | 205 | — | (4) | 201 | ||||||||||||||||
| Realized (Gain) Loss on Risk Management | (10) | — | — | (10) | ||||||||||||||||
| Operating Margin | 215 | — | (4) | 211 | ||||||||||||||||
(1)Includes revenues and expenses related to the Duvernay joint venture.
(2)Other includes reclassification of costs primarily related to third-party cogeneration, processing and transportation.
(3)These amounts, excluding Netback, are found in Note 1 of the interim Consolidated Financial Statements.
| Basis of Netback Calculation | Adjustments | |||||||||||||||||||
Three Months Ended March 31, 2025 ($ millions) | Conventional (1) | Third-party Sourced | Other (1) (2) | Conventional (3) | ||||||||||||||||
| Gross Sales | 379 | 534 | 31 | 944 | ||||||||||||||||
| Royalties | (20) | — | — | (20) | ||||||||||||||||
| Revenues | 359 | 534 | 31 | 924 | ||||||||||||||||
| Expenses | ||||||||||||||||||||
| Purchased Product | — | 534 | 1 | 535 | ||||||||||||||||
| Transportation and Blending | 61 | — | 29 | 90 | ||||||||||||||||
| Operating | 122 | — | 5 | 127 | ||||||||||||||||
| Netback | 176 | — | (4) | 172 | ||||||||||||||||
| Realized (Gain) Loss on Risk Management | (1) | — | — | (1) | ||||||||||||||||
| Operating Margin | 177 | — | (4) | 173 | ||||||||||||||||
(1)Includes revenues and expenses related to the Duvernay joint venture.
(2)Other includes reclassification of costs primarily related to third-party cogeneration, processing and transportation.
(3)These amounts, excluding Netback, are found in Note 1 of the interim Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 39 | ||||
Offshore
| Basis of Netback Calculation | Adjustments | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2026 ($ millions) | Atlantic | China | Indonesia (1) | Total Asia Pacific | Total Offshore | Equity Adjustment (1) | Other (2) | Total Offshore (3) | |||||||||||||||||||||||||||
| Gross Sales | 243 | 297 | 82 | 379 | 622 | (82) | 9 | 549 | |||||||||||||||||||||||||||
| Royalties | (2) | (23) | (20) | (43) | (45) | 20 | — | (25) | |||||||||||||||||||||||||||
| Revenues | 241 | 274 | 62 | 336 | 577 | (62) | 9 | 524 | |||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Purchased Product | — | — | — | — | — | — | 4 | 4 | |||||||||||||||||||||||||||
| Transportation and Blending | 7 | — | — | — | 7 | — | — | 7 | |||||||||||||||||||||||||||
| Operating | 82 | 28 | 13 | 41 | 123 | (11) | (1) | 111 | |||||||||||||||||||||||||||
| Netback | 152 | 246 | 49 | 295 | 447 | (51) | 6 | 402 | |||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | — | — | — | — | |||||||||||||||||||||||||||||||
| Operating Margin | 447 | (51) | 6 | 402 | |||||||||||||||||||||||||||||||
(1)Revenues and expenses related to the HCML joint venture.
(2)Includes other activities not attributable to the production of crude oil and natural gas.
(3)These amounts, excluding Netback, are found in Note 1 of the interim Consolidated Financial Statement
| Basis of Netback Calculation | Adjustments | ||||||||||||||||||||||||||||||||||
Three Months Ended March 31, 2025 ($ millions) | Atlantic | China | Indonesia (1) | Total Asia Pacific | Total Offshore | Equity Adjustment (1) | Other (2) | Total Offshore (3) | |||||||||||||||||||||||||||
| Gross Sales | 146 | 305 | 89 | 394 | 540 | (89) | — | 451 | |||||||||||||||||||||||||||
| Royalties | (2) | (23) | (27) | (50) | (52) | 27 | — | (25) | |||||||||||||||||||||||||||
| Revenues | 144 | 282 | 62 | 344 | 488 | (62) | — | 426 | |||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
| Purchased Product | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
| Transportation and Blending | 6 | — | — | — | 6 | — | — | 6 | |||||||||||||||||||||||||||
| Operating | 64 | 23 | 15 | 38 | 102 | (13) | — | 89 | |||||||||||||||||||||||||||
| Netback | 74 | 259 | 47 | 306 | 380 | (49) | — | 331 | |||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | — | — | — | — | |||||||||||||||||||||||||||||||
| Operating Margin | 380 | (49) | — | 331 | |||||||||||||||||||||||||||||||
(1)Revenues and expenses related to the HCML joint venture.
(2)Includes other activities not attributable to the production of crude oil and natural gas.
(3)These amounts, excluding Netback, are found in Note 1 of the interim Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 40 | ||||
Upstream Sales Volumes (1)
The following table provides the sales volumes used to calculate Netback:
| Three Months Ended March 31, | |||||||||||||||||||||||
| (MBOE/d) | 2026 | 2025 | |||||||||||||||||||||
Oil Sands (2) | |||||||||||||||||||||||
| Foster Creek | 226.8 | 218.6 | |||||||||||||||||||||
| Christina Lake | 348.7 | 239.6 | |||||||||||||||||||||
| Sunrise | 58.9 | 49.5 | |||||||||||||||||||||
Lloydminster | 130.5 | 128.1 | |||||||||||||||||||||
| Total Oil Sands | 764.9 | 635.8 | |||||||||||||||||||||
Conventional (3) | 120.5 | 123.9 | |||||||||||||||||||||
| Offshore | |||||||||||||||||||||||
| Atlantic | 23.1 | 15.8 | |||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||
| China | 41.5 | 42.0 | |||||||||||||||||||||
Indonesia (4) | 15.6 | 15.2 | |||||||||||||||||||||
| Total Asia Pacific | 57.1 | 57.2 | |||||||||||||||||||||
| Total Offshore | 80.2 | 73.0 | |||||||||||||||||||||
(1)Sales volumes exclude the impact of purchased condensate.
(2)Includes bitumen and heavy crude oil sales.
(3)Reported sales volumes reflect Cenovus’s 30 percent equity interest in the Duvernay joint venture.
(4)Reported sales volumes reflect Cenovus’s 40 percent equity interest in the HCML joint venture.
Other Specified Financial Measures
Per-Unit Operating Expenses
Per-unit operating expenses are specified financial measures used to evaluate the performance of our upstream and downstream operations. Our upstream per-unit operating expenses are defined as total operating expenses divided by sales volumes and are part of our Netback calculation, which can be found above.
We define Canadian Refining per-unit operating expenses as total operating expenses from the Upgrader, the Lloydminster Refinery and the commercial fuels business, divided by total processed inputs. We define U.S. Refining per-unit operating expenses as operating expenses divided by total processed inputs.
Per-Unit Transportation Expenses
Per-unit transportation expenses are specified financial measures used to measure transportation expenses on a per-unit basis in our upstream segments. We define per-unit transportation expenses as the total transportation expenses divided by sales volumes. Our upstream per-unit transportation expenses are part of the transportation and blending line in our Netback calculation, which can be found above.
Cenovus Energy Inc. – Q1 2026 Management's Discussion and Analysis | 41 | ||||
Exhibit 99.3
Cenovus Energy Inc.
Interim Consolidated Financial Statements (unaudited)
For the Period Ended March 31, 2026
(Canadian Dollars)
CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
For the period ended March 31, 2026 | ||
| TABLE OF CONTENTS | ||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 2 | ||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited) | ||
For the period ended March 31,
($ millions, except per share amounts)
Three Months Ended | |||||||||||||||||||||||||||||
| Notes | 2026 | 2025 | |||||||||||||||||||||||||||
| Revenues | 1 | 12,356 | 13,299 | ||||||||||||||||||||||||||
| Expenses | 1 | ||||||||||||||||||||||||||||
| Purchased Product, Transportation and Blending | 6,628 | 8,870 | |||||||||||||||||||||||||||
| Operating | 1,475 | 1,629 | |||||||||||||||||||||||||||
| (Gain) Loss on Risk Management | 19 | 9 | 15 | ||||||||||||||||||||||||||
| Depreciation, Depletion, Amortization and Exploration Expense | 9,10,11 | 1,483 | 1,319 | ||||||||||||||||||||||||||
| (Income) Loss From Equity-Accounted Affiliates | (15) | 7 | |||||||||||||||||||||||||||
| General and Administrative | 411 | 197 | |||||||||||||||||||||||||||
| Finance Costs, Net | 5 | 194 | 136 | ||||||||||||||||||||||||||
| Integration, Transaction and Other Costs | 4 | 32 | 2 | ||||||||||||||||||||||||||
| Foreign Exchange (Gain) Loss, Net | 6 | 179 | — | ||||||||||||||||||||||||||
| (Gain) Loss on Divestiture of Assets | (86) | — | |||||||||||||||||||||||||||
| Other (Income) Loss, Net | (38) | (6) | |||||||||||||||||||||||||||
| Earnings (Loss) Before Income Tax | 2,084 | 1,130 | |||||||||||||||||||||||||||
| Income Tax Expense (Recovery) | 7 | 514 | 271 | ||||||||||||||||||||||||||
| Net Earnings (Loss) | 1,570 | 859 | |||||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Tax | 16 | ||||||||||||||||||||||||||||
| Items That Will not be Reclassified to Profit or Loss: | |||||||||||||||||||||||||||||
Actuarial Gain (Loss) Relating to Pension and Other Post-Employment Benefits | 4 | 2 | |||||||||||||||||||||||||||
Change in the Fair Value of Equity Instruments at FVOCI (1) | 19 | 1 | (2) | ||||||||||||||||||||||||||
| Items That may be Reclassified to Profit or Loss: | |||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustment | 244 | (10) | |||||||||||||||||||||||||||
| Total Other Comprehensive Income (Loss), Net of Tax | 249 | (10) | |||||||||||||||||||||||||||
| Comprehensive Income (Loss) | 1,819 | 849 | |||||||||||||||||||||||||||
Net Earnings (Loss) Per Common Share ($) | 8 | ||||||||||||||||||||||||||||
| Basic | 0.84 | 0.47 | |||||||||||||||||||||||||||
| Diluted | 0.83 | 0.47 | |||||||||||||||||||||||||||
(1)Fair value through other comprehensive income (loss) (“FVOCI”).
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 3 | ||||
CONSOLIDATED BALANCE SHEETS (unaudited) | ||
As at
($ millions)
| March 31, | December 31, | ||||||||||||||||
| Notes | 2026 | 2025 | |||||||||||||||
| Assets | |||||||||||||||||
| Current Assets | |||||||||||||||||
| Cash and Cash Equivalents | 2,575 | 2,740 | |||||||||||||||
| Accounts Receivable and Accrued Revenues | 4,734 | 3,435 | |||||||||||||||
| Income Tax Receivable | 41 | 366 | |||||||||||||||
| Inventories | 4,127 | 3,349 | |||||||||||||||
| Total Current Assets | 11,477 | 9,890 | |||||||||||||||
| Restricted Cash | 266 | 256 | |||||||||||||||
| Exploration and Evaluation Assets, Net | 1,9 | 596 | 575 | ||||||||||||||
| Property, Plant and Equipment, Net | 1,10 | 45,097 | 45,260 | ||||||||||||||
| Right-of-Use Assets, Net | 1,11 | 2,105 | 2,153 | ||||||||||||||
| Income Tax Receivable | 25 | 25 | |||||||||||||||
| Investments in Equity-Accounted Affiliates | 291 | 295 | |||||||||||||||
| Other Assets | 538 | 464 | |||||||||||||||
| Deferred Income Taxes | 1,541 | 1,594 | |||||||||||||||
| Goodwill | 1 | 2,912 | 2,912 | ||||||||||||||
| Total Assets | 64,848 | 63,424 | |||||||||||||||
| Liabilities and Equity | |||||||||||||||||
| Current Liabilities | |||||||||||||||||
| Accounts Payable and Accrued Liabilities | 6,691 | 5,847 | |||||||||||||||
| Income Tax Payable | 265 | 98 | |||||||||||||||
| Lease Liabilities | 11 | 374 | 369 | ||||||||||||||
| Total Current Liabilities | 7,330 | 6,314 | |||||||||||||||
| Long-Term Debt | 12 | 10,633 | 11,032 | ||||||||||||||
| Lease Liabilities | 11 | 2,745 | 2,806 | ||||||||||||||
| Decommissioning Liabilities | 13 | 4,901 | 4,872 | ||||||||||||||
| Other Liabilities | 14 | 942 | 889 | ||||||||||||||
| Deferred Income Taxes | 5,764 | 5,873 | |||||||||||||||
| Total Liabilities | 32,315 | 31,786 | |||||||||||||||
| Shareholders’ Equity | 32,517 | 31,622 | |||||||||||||||
| Non-Controlling Interest | 16 | 16 | |||||||||||||||
| Total Liabilities and Equity | 64,848 | 63,424 | |||||||||||||||
| Commitments and Contingencies | 22 | ||||||||||||||||
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 4 | ||||
CONSOLIDATED STATEMENTS OF EQUITY (unaudited) | ||
($ millions)
| Shareholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Treasury Shares | Preferred Shares | Warrants | Paid in Surplus | Retained Earnings | AOCI (1) | Total | ||||||||||||||||||||||||||||||||||||||||||||||
(Note 15) | (Note 15) | (Note 15) | (Note 15) | (Note 16) | |||||||||||||||||||||||||||||||||||||||||||||||||
As at December 31, 2024 | 15,659 | (43) | 356 | 12 | 944 | 10,513 | 2,313 | 29,754 | |||||||||||||||||||||||||||||||||||||||||||||
| Net Earnings (Loss) | — | — | — | — | — | 859 | — | 859 | |||||||||||||||||||||||||||||||||||||||||||||
| Other Comprehensive Income (Loss), Net of Tax | — | — | — | — | — | — | (10) | (10) | |||||||||||||||||||||||||||||||||||||||||||||
| Total Comprehensive Income (Loss) | — | — | — | — | — | 859 | (10) | 849 | |||||||||||||||||||||||||||||||||||||||||||||
Common Shares Issued Under Stock Option Plans | 4 | — | — | — | (1) | — | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||
Purchase of Common Shares Under NCIB (2) | (25) | — | — | — | (37) | — | — | (62) | |||||||||||||||||||||||||||||||||||||||||||||
Purchase of Common Shares Under Employee Benefit Plan | — | (58) | — | — | — | — | — | (58) | |||||||||||||||||||||||||||||||||||||||||||||
Common Shares Issued Under Employee Benefit Plan | — | 81 | — | — | (6) | — | — | 75 | |||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares Redeemed | — | — | (140) | — | (60) | — | — | (200) | |||||||||||||||||||||||||||||||||||||||||||||
| Warrants Exercised | 2 | — | — | (1) | — | — | — | 1 | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation Expense | — | — | — | — | 3 | — | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||
| Base Dividends on Common Shares | — | — | — | — | — | (327) | — | (327) | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends on Preferred Shares | — | — | — | — | — | (6) | — | (6) | |||||||||||||||||||||||||||||||||||||||||||||
As at March 31, 2025 | 15,640 | (20) | 216 | 11 | 843 | 11,039 | 2,303 | 30,032 | |||||||||||||||||||||||||||||||||||||||||||||
As at December 31, 2025 | 18,599 | (116) | 113 | 4 | 298 | 12,323 | 401 | 31,622 | |||||||||||||||||||||||||||||||||||||||||||||
| Net Earnings (Loss) | — | — | — | — | — | 1,570 | — | 1,570 | |||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss), Net of Tax | — | — | — | — | — | — | 249 | 249 | |||||||||||||||||||||||||||||||||||||||||||||
| Total Comprehensive Income (Loss) | — | — | — | — | — | 1,570 | 249 | 1,819 | |||||||||||||||||||||||||||||||||||||||||||||
Common Shares Issued Under Stock Option Plans | 54 | — | — | — | (10) | — | — | 44 | |||||||||||||||||||||||||||||||||||||||||||||
Purchase of Common Shares Under NCIB (2) | (114) | — | — | — | — | (242) | — | (356) | |||||||||||||||||||||||||||||||||||||||||||||
Purchase of Common Shares Under Employee Benefit Plan | — | (51) | — | — | — | — | — | (51) | |||||||||||||||||||||||||||||||||||||||||||||
Common Shares Issued Under Employee Benefit Plan | — | 80 | — | — | — | 31 | — | 111 | |||||||||||||||||||||||||||||||||||||||||||||
| Preferred Shares Redeemed | — | — | (113) | — | — | (187) | — | (300) | |||||||||||||||||||||||||||||||||||||||||||||
| Warrants Exercised | 5 | — | — | (2) | — | — | — | 3 | |||||||||||||||||||||||||||||||||||||||||||||
| Warrants Expired | — | — | — | (2) | — | 2 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-Based Compensation Expense | — | — | — | — | 4 | — | — | 4 | |||||||||||||||||||||||||||||||||||||||||||||
| Base Dividends on Common Shares | — | — | — | — | — | (377) | — | (377) | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends on Preferred Shares | — | — | — | — | — | (2) | — | (2) | |||||||||||||||||||||||||||||||||||||||||||||
As at March 31, 2026 | 18,544 | (87) | — | — | 292 | 13,118 | 650 | 32,517 | |||||||||||||||||||||||||||||||||||||||||||||
(1)Accumulated other comprehensive income (loss) (“AOCI”).
(2)Normal course issuer bid (“NCIB”). Includes taxes payable on purchase of shares.
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 5 | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) | ||
($ millions)
Three Months Ended | ||||||||||||||||||||||||||
| Notes | 2026 | 2025 | ||||||||||||||||||||||||
| Operating Activities | ||||||||||||||||||||||||||
| Net Earnings (Loss) | 1,570 | 859 | ||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 10,11 | 1,471 | 1,314 | |||||||||||||||||||||||
| Deferred Income Tax Expense (Recovery) | 7 | (33) | (66) | |||||||||||||||||||||||
| Unrealized (Gain) Loss on Risk Management | 19 | (1) | 23 | |||||||||||||||||||||||
| Unrealized Foreign Exchange (Gain) Loss | 6 | 180 | 19 | |||||||||||||||||||||||
| (Gain) Loss on Divestiture of Assets | (86) | — | ||||||||||||||||||||||||
| Unwinding of Discount on Decommissioning Liabilities | 13 | 64 | 58 | |||||||||||||||||||||||
| (Income) Loss From Equity-Accounted Affiliates | (15) | 7 | ||||||||||||||||||||||||
| Distributions Received From Equity-Accounted Affiliates | 22 | 25 | ||||||||||||||||||||||||
| Stock-Based Compensation, Net of Payments | 210 | 7 | ||||||||||||||||||||||||
| Other | (5) | (34) | ||||||||||||||||||||||||
| Settlement of Decommissioning Liabilities | 13 | (53) | (36) | |||||||||||||||||||||||
| Net Change in Non-Cash Working Capital | 21 | (1,143) | (861) | |||||||||||||||||||||||
| Cash From (Used in) Operating Activities | 2,181 | 1,315 | ||||||||||||||||||||||||
| Investing Activities | ||||||||||||||||||||||||||
| Acquisitions, Net of Cash Acquired | (10) | (100) | ||||||||||||||||||||||||
| Capital Investment | 1 | (1,170) | (1,229) | |||||||||||||||||||||||
Proceeds From Divestitures | 99 | — | ||||||||||||||||||||||||
| Net Change in Investments and Other | 12 | 4 | ||||||||||||||||||||||||
| Net Change in Non-Cash Working Capital | 21 | (1) | (23) | |||||||||||||||||||||||
| Cash From (Used in) Investing Activities | (1,070) | (1,348) | ||||||||||||||||||||||||
| Net Cash Provided (Used) Before Financing Activities | 1,111 | (33) | ||||||||||||||||||||||||
| Financing Activities | 21 | |||||||||||||||||||||||||
| Net Issuance (Repayment) of Short-Term Borrowings | — | 150 | ||||||||||||||||||||||||
| Repayment of Long-Term Debt | 12 | (500) | (12) | |||||||||||||||||||||||
| Principal Repayment of Leases | 11 | (90) | (83) | |||||||||||||||||||||||
| Net Proceeds (Repayments) on Repurchase Agreements | 294 | 300 | ||||||||||||||||||||||||
| Common Shares Issued Under Stock Option Plans | 44 | 3 | ||||||||||||||||||||||||
| Purchase of Common Shares Under NCIB | 15 | (356) | (62) | |||||||||||||||||||||||
| Purchase of Common Shares Under Employee Benefit Plan | 15 | (51) | (58) | |||||||||||||||||||||||
| Redemption of Preferred Shares | 15 | (300) | (200) | |||||||||||||||||||||||
| Proceeds From Exercise of Warrants | 3 | 1 | ||||||||||||||||||||||||
| Dividends Paid | 8 | (379) | (333) | |||||||||||||||||||||||
| Cash From (Used in) Financing Activities | (1,335) | (294) | ||||||||||||||||||||||||
Effect of Foreign Exchange on Cash and Cash Equivalents | 59 | 2 | ||||||||||||||||||||||||
| Increase (Decrease) in Cash and Cash Equivalents | (165) | (325) | ||||||||||||||||||||||||
| Cash and Cash Equivalents, Beginning of Period | 2,740 | 3,093 | ||||||||||||||||||||||||
| Cash and Cash Equivalents, End of Period | 2,575 | 2,768 | ||||||||||||||||||||||||
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 6 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES | ||
Cenovus Energy Inc. (“Cenovus” or the “Company”) is an integrated energy company with crude oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States (“U.S.”).
Cenovus is incorporated under the Canada Business Corporations Act and its common shares are listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange. The executive and registered office is located at 4100, 225 6 Avenue S.W., Calgary, Alberta, Canada, T2P 1N2. Information on the Company’s basis of preparation for these interim Consolidated Financial Statements is found in Note 2.
Management has determined the operating segments based on information regularly reviewed for the purposes of decision making, allocating resources and assessing operational performance by Cenovus’s chief operating decision maker. The Company’s operating segments are aggregated based on their geographic locations, the nature of the businesses or a combination of these factors. The Company evaluates the financial performance of its operating segments primarily based on operating margin.
The Company operates through the following reportable segments:
Upstream Segments
•Oil Sands, includes the development and production of bitumen and heavy oil in northern Alberta and Saskatchewan. Cenovus’s oil sands assets include Foster Creek, Christina Lake, Sunrise, Lloydminster thermal and Lloydminster conventional heavy oil assets. Cenovus jointly owns and operates pipeline gathering systems and terminals through the equity-accounted investment in Husky Midstream Limited Partnership (“HMLP”). The sale and transportation of Cenovus’s production and third-party commodity trading volumes are managed and marketed through access to capacity on third-party pipelines and storage facilities in both Canada and the U.S. to optimize product mix, delivery points, transportation commitments and customer diversification.
•Conventional, includes assets rich in natural gas liquids (“NGLs”) and natural gas in Alberta and British Columbia in the Edson, Clearwater and Rainbow Lake operating areas, in addition to the Northern Corridor, which includes Elmworth and Wapiti. The segment also includes interests in numerous natural gas processing facilities. Cenovus’s NGLs and natural gas production is marketed and transported, with additional third-party commodity trading volumes, through access to capacity on third-party pipelines, export terminals and storage facilities. These provide flexibility for market access to optimize product mix, delivery points, transportation commitments and customer diversification.
•Offshore, includes offshore operations, exploration and development activities in the east coast of Canada and the Asia Pacific region, representing China and the equity-accounted investment in Husky-CNOOC Madura Limited (“HCML”), which is engaged in the exploration for, and production of, NGLs and natural gas in offshore Indonesia.
Downstream Segments
•Canadian Refining, includes the owned and operated Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt and other ancillary products. Cenovus also owns and operates the Bruderheim crude-by-rail terminal and two ethanol plants. Cenovus markets its production and third-party commodity trading volumes in an effort to use its integrated network of assets to maximize value.
•U.S. Refining, includes the refining of crude oil to produce gasoline, diesel, jet fuel, asphalt and other products at the wholly-owned Lima, Superior and Toledo refineries. Cenovus markets its own and third-party refined products.
Corporate and Eliminations
Corporate and Eliminations, includes Cenovus-wide costs for general and administrative, financing activities, gains and losses on risk management for corporate-related derivative instruments and foreign exchange. Eliminations include adjustments for feedstock and internal usage of crude oil, natural gas, condensate, other NGLs and refined products between segments; transloading services provided to the Oil Sands segment by the Company’s crude-by-rail terminal; the sale of condensate extracted from blended crude oil production in the Canadian Refining segment and sold to the Oil Sands segment; and unrealized profits in inventory. Eliminations are recorded based on market prices.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 7 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
A) Results of Operations – Segment and Operational Information
| Upstream | |||||||||||||||||||||||||||||||||||||||||||||||
| For the three months ended | Oil Sands | Conventional | Offshore | Total | |||||||||||||||||||||||||||||||||||||||||||
| March 31, | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||
| Gross Sales | |||||||||||||||||||||||||||||||||||||||||||||||
| External Sales | 6,892 | 5,904 | 568 | 443 | 549 | 451 | 8,009 | 6,798 | |||||||||||||||||||||||||||||||||||||||
| Intersegment Sales | 1,892 | 1,953 | 469 | 501 | — | — | 2,361 | 2,454 | |||||||||||||||||||||||||||||||||||||||
| 8,784 | 7,857 | 1,037 | 944 | 549 | 451 | 10,370 | 9,252 | ||||||||||||||||||||||||||||||||||||||||
Royalties | (940) | (861) | (18) | (20) | (25) | (25) | (983) | (906) | |||||||||||||||||||||||||||||||||||||||
| Revenues | 7,844 | 6,996 | 1,019 | 924 | 524 | 426 | 9,387 | 8,346 | |||||||||||||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||||||||||||||
Purchased Product | 617 | 632 | 623 | 535 | 4 | — | 1,244 | 1,167 | |||||||||||||||||||||||||||||||||||||||
Transportation and Blending | 3,283 | 3,151 | 85 | 90 | 7 | 6 | 3,375 | 3,247 | |||||||||||||||||||||||||||||||||||||||
Operating | 826 | 677 | 110 | 127 | 111 | 89 | 1,047 | 893 | |||||||||||||||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 23 | (8) | (10) | (1) | — | — | 13 | (9) | |||||||||||||||||||||||||||||||||||||||
| Operating Margin | 3,095 | 2,544 | 211 | 173 | 402 | 331 | 3,708 | 3,048 | |||||||||||||||||||||||||||||||||||||||
Unrealized (Gain) Loss on Risk Management | (90) | (7) | 4 | — | — | — | (86) | (7) | |||||||||||||||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 1,027 | 834 | 134 | 120 | 129 | 130 | 1,290 | 1,084 | |||||||||||||||||||||||||||||||||||||||
| Exploration Expense | 1 | 4 | — | — | 11 | 1 | 12 | 5 | |||||||||||||||||||||||||||||||||||||||
| (Income) Loss From Equity- Accounted Affiliates | — | — | (1) | — | (15) | (8) | (16) | (8) | |||||||||||||||||||||||||||||||||||||||
| Segment Income (Loss) | 2,157 | 1,713 | 74 | 53 | 277 | 208 | 2,508 | 1,974 | |||||||||||||||||||||||||||||||||||||||
| Downstream | |||||||||||||||||||||||||||||||||||
Canadian Refining | U.S. Refining | Total | |||||||||||||||||||||||||||||||||
For the three months ended March 31, | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
Gross Sales | |||||||||||||||||||||||||||||||||||
| External Sales | 1,110 | 985 | 4,220 | 6,422 | 5,330 | 7,407 | |||||||||||||||||||||||||||||
| Intersegment Sales | 297 | 297 | — | 1 | 297 | 298 | |||||||||||||||||||||||||||||
| 1,407 | 1,282 | 4,220 | 6,423 | 5,627 | 7,705 | ||||||||||||||||||||||||||||||
Royalties | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Revenues | 1,407 | 1,282 | 4,220 | 6,423 | 5,627 | 7,705 | |||||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||||
Purchased Product | 1,060 | 1,076 | 3,318 | 6,006 | 4,378 | 7,082 | |||||||||||||||||||||||||||||
Transportation and Blending | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Operating | 146 | 138 | 380 | 716 | 526 | 854 | |||||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | — | — | (11) | 6 | (11) | 6 | |||||||||||||||||||||||||||||
| Operating Margin | 201 | 68 | 533 | (305) | 734 | (237) | |||||||||||||||||||||||||||||
Unrealized (Gain) Loss on Risk Management | — | — | 30 | (8) | 30 | (8) | |||||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 45 | 47 | 112 | 158 | 157 | 205 | |||||||||||||||||||||||||||||
| Exploration Expense | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| (Income) Loss From Equity-Accounted Affiliates | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Segment Income (Loss) | 156 | 21 | 391 | (455) | 547 | (434) | |||||||||||||||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 8 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
| Corporate and Eliminations | Consolidated | |||||||||||||||||||||||||||||||||||||||||||
For the three months ended March 31, | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||
| Gross Sales | ||||||||||||||||||||||||||||||||||||||||||||
| External Sales | — | — | 13,339 | 14,205 | ||||||||||||||||||||||||||||||||||||||||
| Intersegment Sales | (2,658) | (2,752) | — | — | ||||||||||||||||||||||||||||||||||||||||
| (2,658) | (2,752) | 13,339 | 14,205 | |||||||||||||||||||||||||||||||||||||||||
Royalties | — | — | (983) | (906) | ||||||||||||||||||||||||||||||||||||||||
Revenues | (2,658) | (2,752) | 12,356 | 13,299 | ||||||||||||||||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||||||||||||
Purchased Product | (2,129) | (2,370) | 3,493 | 5,879 | ||||||||||||||||||||||||||||||||||||||||
Transportation and Blending | (240) | (256) | 3,135 | 2,991 | ||||||||||||||||||||||||||||||||||||||||
Purchased Product, Transportation and Blending | (2,369) | (2,626) | 6,628 | 8,870 | ||||||||||||||||||||||||||||||||||||||||
Operating | (98) | (118) | 1,475 | 1,629 | ||||||||||||||||||||||||||||||||||||||||
| Realized (Gain) Loss on Risk Management | 8 | (5) | 10 | (8) | ||||||||||||||||||||||||||||||||||||||||
Unrealized (Gain) Loss on Risk Management | 55 | 38 | (1) | 23 | ||||||||||||||||||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 24 | 25 | 1,471 | 1,314 | ||||||||||||||||||||||||||||||||||||||||
| Exploration Expense | — | — | 12 | 5 | ||||||||||||||||||||||||||||||||||||||||
| (Income) Loss From Equity-Accounted Affiliates | 1 | 15 | (15) | 7 | ||||||||||||||||||||||||||||||||||||||||
| Segment Income (Loss) | (279) | (81) | 2,776 | 1,459 | ||||||||||||||||||||||||||||||||||||||||
| General and Administrative | 411 | 197 | 411 | 197 | ||||||||||||||||||||||||||||||||||||||||
| Finance Costs, Net | 194 | 136 | 194 | 136 | ||||||||||||||||||||||||||||||||||||||||
| Integration, Transaction and Other Costs | 32 | 2 | 32 | 2 | ||||||||||||||||||||||||||||||||||||||||
| Foreign Exchange (Gain) Loss, Net | 179 | — | 179 | — | ||||||||||||||||||||||||||||||||||||||||
| (Gain) Loss on Divestiture of Assets | (86) | — | (86) | — | ||||||||||||||||||||||||||||||||||||||||
| Other (Income) Loss, Net | (38) | (6) | (38) | (6) | ||||||||||||||||||||||||||||||||||||||||
| 692 | 329 | 692 | 329 | |||||||||||||||||||||||||||||||||||||||||
| Earnings (Loss) Before Income Tax | 2,084 | 1,130 | ||||||||||||||||||||||||||||||||||||||||||
| Income Tax Expense (Recovery) | 514 | 271 | ||||||||||||||||||||||||||||||||||||||||||
| Net Earnings (Loss) | 1,570 | 859 | ||||||||||||||||||||||||||||||||||||||||||
B) External Sales by Product
| Upstream | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the three months ended | Oil Sands | Conventional | Offshore | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
March 31, | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Crude Oil | 6,604 | 5,423 | 109 | 38 | 247 | 146 | 6,960 | 5,607 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Natural Gas and Other | 166 | 78 | 398 | 304 | 222 | 228 | 786 | 610 | |||||||||||||||||||||||||||||||||||||||||||||||||||
NGLs (1) | 122 | 403 | 61 | 101 | 80 | 77 | 263 | 581 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| External Sales | 6,892 | 5,904 | 568 | 443 | 549 | 451 | 8,009 | 6,798 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Downstream | |||||||||||||||||||||||||||||||||||
| Canadian Refining | U.S. Refining | Total | |||||||||||||||||||||||||||||||||
For the three months ended March 31, | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Gasoline | 55 | 49 | 1,970 | 3,114 | 2,025 | 3,163 | |||||||||||||||||||||||||||||
Distillates (2) | 421 | 356 | 1,672 | 2,485 | 2,093 | 2,841 | |||||||||||||||||||||||||||||
| Synthetic Crude Oil | 425 | 404 | — | — | 425 | 404 | |||||||||||||||||||||||||||||
| Asphalt | 45 | 70 | 124 | 194 | 169 | 264 | |||||||||||||||||||||||||||||
| Other Products and Services | 164 | 106 | 454 | 629 | 618 | 735 | |||||||||||||||||||||||||||||
| External Sales | 1,110 | 985 | 4,220 | 6,422 | 5,330 | 7,407 | |||||||||||||||||||||||||||||
(1)Third-party condensate sales are included within NGLs.
(2)Includes diesel and jet fuel.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 9 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
C) Geographical Information
Revenues (1) | |||||||||||||||||||||||
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Canada | 7,601 | 6,184 | |||||||||||||||||||||
| United States | 4,481 | 6,833 | |||||||||||||||||||||
| China | 274 | 282 | |||||||||||||||||||||
| Consolidated | 12,356 | 13,299 | |||||||||||||||||||||
(1)Revenues from external customers by country are classified based on the jurisdiction in which the selling entities are located.
Non-Current Assets (1) | |||||||||||
March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
| Canada | 47,501 | 47,641 | |||||||||
| United States | 2,506 | 2,514 | |||||||||
| China | 884 | 939 | |||||||||
| Indonesia | 198 | 203 | |||||||||
| Consolidated | 51,089 | 51,297 | |||||||||
(1)Includes exploration and evaluation (“E&E”) assets, property, plant and equipment (“PP&E”), right-of-use (“ROU”) assets, income tax receivable, investments in equity-accounted affiliates, precious metals, intangible assets and goodwill.
D) Assets by Segment
| E&E Assets | PP&E | ROU Assets | |||||||||||||||||||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||||||||||||
| As at | 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Oil Sands | 594 | 568 | 33,994 | 34,149 | 1,174 | 1,204 | |||||||||||||||||||||||||||||
| Conventional | — | — | 2,166 | 2,202 | 40 | 44 | |||||||||||||||||||||||||||||
| Offshore | 2 | 7 | 4,054 | 4,008 | 169 | 180 | |||||||||||||||||||||||||||||
| Canadian Refining | — | — | 2,434 | 2,452 | 51 | 50 | |||||||||||||||||||||||||||||
| U.S. Refining | — | — | 2,239 | 2,238 | 283 | 287 | |||||||||||||||||||||||||||||
| Corporate and Eliminations | — | — | 210 | 211 | 388 | 388 | |||||||||||||||||||||||||||||
| Consolidated | 596 | 575 | 45,097 | 45,260 | 2,105 | 2,153 | |||||||||||||||||||||||||||||
| Goodwill | Total Assets | ||||||||||||||||||||||
| March 31, | December 31, | March 31, | December 31, | ||||||||||||||||||||
| As at | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Oil Sands | 2,912 | 2,912 | 43,603 | 42,505 | |||||||||||||||||||
| Conventional | — | — | 2,525 | 2,579 | |||||||||||||||||||
| Offshore | — | — | 4,860 | 4,756 | |||||||||||||||||||
| Canadian Refining | — | — | 2,925 | 2,831 | |||||||||||||||||||
| U.S. Refining | — | — | 5,237 | 4,698 | |||||||||||||||||||
Corporate and Eliminations | — | — | 5,698 | 6,055 | |||||||||||||||||||
| Consolidated | 2,912 | 2,912 | 64,848 | 63,424 | |||||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 10 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
E) Capital Expenditures (1)
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Capital Investment | |||||||||||||||||||||||
| Oil Sands | 851 | 763 | |||||||||||||||||||||
| Conventional | 93 | 122 | |||||||||||||||||||||
| Offshore | |||||||||||||||||||||||
| Atlantic | 119 | 227 | |||||||||||||||||||||
| Asia Pacific | 23 | 14 | |||||||||||||||||||||
| Total Upstream | 1,086 | 1,126 | |||||||||||||||||||||
Canadian Refining | 24 | 22 | |||||||||||||||||||||
U.S. Refining | 58 | 77 | |||||||||||||||||||||
| Total Downstream | 82 | 99 | |||||||||||||||||||||
| Corporate and Eliminations | 2 | 4 | |||||||||||||||||||||
| 1,170 | 1,229 | ||||||||||||||||||||||
| Acquisitions | |||||||||||||||||||||||
| Oil Sands | 3 | 92 | |||||||||||||||||||||
| Conventional | 1 | — | |||||||||||||||||||||
| 4 | 92 | ||||||||||||||||||||||
| Total Capital Expenditures | 1,174 | 1,321 | |||||||||||||||||||||
(1)Includes expenditures on PP&E, E&E assets and capitalized interest.
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE | ||
In these interim Consolidated Financial Statements, unless otherwise indicated, all dollars are expressed in Canadian dollars. All references to C$ or $ are to Canadian dollars and references to US$ are to U.S. dollars.
These interim Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) (the “IFRS Accounting Standards”) applicable to the preparation of interim financial statements, including International Accounting Standard 34, “Interim Financial Reporting”. These interim Consolidated Financial Statements were prepared following the same accounting policies and methods of computation as the annual Consolidated Financial Statements for the year ended December 31, 2025, except for income taxes. Income taxes on earnings or loss in the interim period are accrued using the income tax rate that would be applicable to the expected annual earnings or loss.
Certain information and disclosures normally included in the notes to the annual Consolidated Financial Statements were condensed. Accordingly, these interim Consolidated Financial Statements should be read in conjunction with the annual Consolidated Financial Statements for the year ended December 31, 2025, which were prepared in accordance with IFRS Accounting Standards.
These interim Consolidated Financial Statements were approved by the Board of Directors effective May 5, 2026.
3. UPDATES TO ACCOUNTING POLICIES | ||
A) Adoption of Amendments to Financial Instruments
Effective January 1, 2026, the Company adopted the amendments to IFRS 9, “Financial Instruments” (“IFRS 9”) and IFRS 7, “Financial Instruments: Disclosures” (“IFRS 7”). The amendments clarify the derecognition of financial liabilities and the classification of certain financial assets. The adoption of the amendments to IFRS 9 and IFRS 7 did not have a material impact on the Company’s Consolidated Financial Statements.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 11 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
B) Recent Accounting Pronouncements
On April 9, 2024, the IASB issued IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”), which will replace International Accounting Standard 1, “Presentation of Financial Statements”. IFRS 18 will establish a revised structure for the Consolidated Statements of Comprehensive Income (Loss), including new defined subtotals, enhanced principles on aggregation and disaggregation, and additional disclosure requirements related to management-defined performance measures (“MPMs”). The objective of the standard is to improve comparability across entities and reporting periods. IFRS 18 will not impact recognition or measurement of income and expenses.
Cenovus has executed a parallel system environment to reflect the new presentation requirements. The changes will primarily reflect a re-mapping of line items on the Consolidated Statements of Comprehensive Income (Loss) to newly defined categories. Items such as foreign exchange gains and losses will require segregation. The primary impact on the Consolidated Statements of Cash Flows will be the movement of certain finance costs from operating activities to financing activities. The Company has also identified metrics anticipated to be defined as MPMs.
The Company will continue to evaluate the impacts until adoption on January 1, 2027. The standard will be applied retrospectively, with certain transition provisions.
4. MEG ENERGY CORP. ACQUISITION | ||
On November 13, 2025, Cenovus completed the acquisition of MEG Energy Corp. (“MEG”) through a plan of arrangement (the “MEG Acquisition”), pursuant to which Cenovus acquired all the issued and outstanding common shares of MEG, other than common shares of MEG already owned by Cenovus, for total purchase consideration of $7.1 billion, consisting of $3.4 billion in cash, 143.9 million Cenovus common shares and $32 million of assumed stock-based compensation. The MEG Acquisition provided Cenovus with additional oil sands assets that are directly adjacent to the Company’s Christina Lake asset and are reported under the Christina Lake results in the Oil Sands segment.
The preliminary purchase price allocation was based on Management’s best estimate of the assets acquired and liabilities assumed. The Company will finalize the value of net assets acquired by November 13, 2026, and adjustments to initial estimates, including goodwill, may be required. No adjustments were made to the preliminary purchase price allocation as at March 31, 2026. For further details, see Note 4 of the annual Consolidated Financial Statements for the year ended December 31, 2025.
For the three months ended March 31, 2026, integration and transaction costs related to the MEG Acquisition of $12 million were recognized in net earnings (loss).
5. FINANCE COSTS, NET | ||
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Interest Expense – Short-Term Borrowings and Long-Term Debt | 123 | 79 | |||||||||||||||||||||
Interest Expense – Lease Liabilities (Note 11) | 46 | 43 | |||||||||||||||||||||
Unwinding of Discount on Decommissioning Liabilities (Note 13) | 64 | 58 | |||||||||||||||||||||
| Other | 12 | 6 | |||||||||||||||||||||
| Capitalized Interest | (25) | (17) | |||||||||||||||||||||
| Finance Costs | 220 | 169 | |||||||||||||||||||||
| Interest Income | (26) | (33) | |||||||||||||||||||||
| 194 | 136 | ||||||||||||||||||||||
6. FOREIGN EXCHANGE (GAIN) LOSS, NET | ||
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Unrealized Foreign Exchange (Gain) Loss on Translation of: | |||||||||||||||||||||||
| U.S. Dollar Debt | Other | 100 | (5) | ||||||||||||||||||||
| Other | 80 | 24 | |||||||||||||||||||||
| Unrealized Foreign Exchange (Gain) Loss | 180 | 19 | |||||||||||||||||||||
| Realized Foreign Exchange (Gain) Loss | (1) | (19) | |||||||||||||||||||||
| 179 | — | ||||||||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 12 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
7. INCOME TAXES | ||
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Current Tax | |||||||||||||||||||||||
| Canada | 479 | 279 | |||||||||||||||||||||
| United States | 6 | — | |||||||||||||||||||||
| Asia Pacific | 54 | 45 | |||||||||||||||||||||
| Other International | 8 | 13 | |||||||||||||||||||||
| Total Current Tax Expense (Recovery) | 547 | 337 | |||||||||||||||||||||
| Deferred Tax Expense (Recovery) | (33) | (66) | |||||||||||||||||||||
| 514 | 271 | ||||||||||||||||||||||
8. PER SHARE AMOUNTS | ||
A) Net Earnings (Loss) Per Common Share – Basic and Diluted
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Net Earnings (Loss) | 1,570 | 859 | |||||||||||||||||||||
| Effect of Cumulative Dividends on Preferred Shares | (2) | (6) | |||||||||||||||||||||
| Net Earnings (Loss) – Basic | 1,568 | 853 | |||||||||||||||||||||
| Effect of Stock-Based Compensation | — | 1 | |||||||||||||||||||||
| Net Earnings (Loss) – Diluted | 1,568 | 854 | |||||||||||||||||||||
Basic – Weighted Average Number of Shares (thousands) | 1,874,914 | 1,821,325 | |||||||||||||||||||||
| Dilutive Effect of Warrants | — | 2,505 | |||||||||||||||||||||
| Dilutive Effect of Stock-Based Compensation | 4,139 | 7,435 | |||||||||||||||||||||
Diluted – Weighted Average Number of Shares (thousands) | 1,879,053 | 1,831,265 | |||||||||||||||||||||
Net Earnings (Loss) Per Common Share – Basic ($) | 0.84 | 0.47 | |||||||||||||||||||||
Net Earnings (Loss) Per Common Share – Diluted (1) ($) | 0.83 | 0.47 | |||||||||||||||||||||
(1)For the three months ended March 31, 2026, 24.8 million (2025 — 13.4 million) common shares related to the assumed exercise of stock-based compensation were excluded from the calculation of dilutive net earnings (loss) per share, as the effect was anti-dilutive.
B) Common Share Dividends
For the three months ended March 31, 2026, the Company paid dividends of $377 million or $0.200 per common share (2025 – $327 million or $0.180 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 May 5, 2026, the Company’s Board of Directors declared a second quarter base dividend of $0.220 per common share, payable on June 30, 2026, to common shareholders of record as at June 15, 2026.
C) Preferred Share Dividends
For the three months ended March 31, 2026, the Company declared and paid preferred share dividends of $2 million (2025 – $6 million).
9. EXPLORATION AND EVALUATION ASSETS, NET | ||
| Total | |||||
As at December 31, 2025 | 575 | ||||
| Acquisitions | 3 | ||||
| Additions | 23 | ||||
| Write-downs | (5) | ||||
Exchange Rate Movements and Other | — | ||||
As at March 31, 2026 | 596 | ||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 13 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
10. PROPERTY, PLANT AND EQUIPMENT, NET | ||
| Crude Oil and Natural Gas Properties | Processing, Transportation and Storage Assets | Refining Assets | Other Assets (1) | Total | |||||||||||||||||||||||||
| COST | |||||||||||||||||||||||||||||
As at December 31, 2025 | 65,567 | 275 | 7,147 | 1,959 | 74,948 | ||||||||||||||||||||||||
| Acquisitions | 1 | — | — | — | 1 | ||||||||||||||||||||||||
| Additions | 1,063 | — | 82 | 2 | 1,147 | ||||||||||||||||||||||||
| Change in Decommissioning Liabilities | 8 | — | — | — | 8 | ||||||||||||||||||||||||
| Divestitures | (5) | — | — | (4) | (9) | ||||||||||||||||||||||||
| Exchange Rate Movements and Other | 38 | — | 76 | 12 | 126 | ||||||||||||||||||||||||
As at March 31, 2026 | 66,672 | 275 | 7,305 | 1,969 | 76,221 | ||||||||||||||||||||||||
| ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION | |||||||||||||||||||||||||||||
As at December 31, 2025 | 25,208 | 143 | 2,834 | 1,503 | 29,688 | ||||||||||||||||||||||||
| Depreciation, Depletion and Amortization | 1,240 | 2 | 131 | 18 | 1,391 | ||||||||||||||||||||||||
| Divestitures | (4) | — | — | (3) | (7) | ||||||||||||||||||||||||
| Exchange Rate Movements and Other | 14 | — | 39 | (1) | 52 | ||||||||||||||||||||||||
As at March 31, 2026 | 26,458 | 145 | 3,004 | 1,517 | 31,124 | ||||||||||||||||||||||||
| CARRYING VALUE | |||||||||||||||||||||||||||||
As at December 31, 2025 | 40,359 | 132 | 4,313 | 456 | 45,260 | ||||||||||||||||||||||||
As at March 31, 2026 | 40,214 | 130 | 4,301 | 452 | 45,097 | ||||||||||||||||||||||||
(1)Includes assets within the commercial fuels business, office furniture, fixtures, leasehold improvements, information technology and aircraft.
11. LEASES | ||
A) Right-of-Use Assets, Net
| Real Estate | Transportation and Storage Assets (1) | Refining Assets | Other Assets (2) | Total | |||||||||||||||||||||||||
| COST | |||||||||||||||||||||||||||||
As at December 31, 2025 | 611 | 2,635 | 148 | 122 | 3,516 | ||||||||||||||||||||||||
| Additions | — | 12 | — | 2 | 14 | ||||||||||||||||||||||||
| Modifications | 1 | 5 | — | — | 6 | ||||||||||||||||||||||||
| Exchange Rate Movements and Other | (2) | 23 | 4 | — | 25 | ||||||||||||||||||||||||
As at March 31, 2026 | 610 | 2,675 | 152 | 124 | 3,561 | ||||||||||||||||||||||||
| ACCUMULATED DEPRECIATION | |||||||||||||||||||||||||||||
As at December 31, 2025 | 223 | 977 | 92 | 71 | 1,363 | ||||||||||||||||||||||||
| Depreciation | 9 | 63 | 2 | 6 | 80 | ||||||||||||||||||||||||
| Exchange Rate Movements and Other | 1 | 7 | 2 | 3 | 13 | ||||||||||||||||||||||||
As at March 31, 2026 | 233 | 1,047 | 96 | 80 | 1,456 | ||||||||||||||||||||||||
| CARRYING VALUE | |||||||||||||||||||||||||||||
As at December 31, 2025 | 388 | 1,658 | 56 | 51 | 2,153 | ||||||||||||||||||||||||
As at March 31, 2026 | 377 | 1,628 | 56 | 44 | 2,105 | ||||||||||||||||||||||||
(1)Includes a pipeline, storage tanks, terminals, railcars, vessels, a natural gas processing plant and caverns.
(2)Includes assets in the commercial fuels business, fleet vehicles, camps and other equipment.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 14 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
B) Lease Liabilities
| Total | |||||
As at December 31, 2025 | 3,175 | ||||
| Additions | 13 | ||||
Interest Expense (Note 5) | 46 | ||||
| Lease Payments | (136) | ||||
| Modifications | 6 | ||||
| Exchange Rate Movements and Other | 15 | ||||
As at March 31, 2026 | 3,119 | ||||
| Less: Current Portion | 374 | ||||
| Long-Term Portion | 2,745 | ||||
12. DEBT AND CAPITAL STRUCTURE | ||
A) Short-Term Borrowings
As at March 31, 2026, the Company had uncommitted demand facilities of $1.5 billion (December 31, 2025 – $1.5 billion) in place, of which $1.4 billion may be drawn for general purposes, or the full amount may be available to issue letters of credit. As at March 31, 2026, there were outstanding letters of credit aggregating to $372 million (December 31, 2025 – $341 million) and no direct borrowings (December 31, 2025 – $nil).
B) Long-Term Debt
| March 31, | December 31, | |||||||||||||||||||
| As at | 2026 | 2025 | ||||||||||||||||||
Committed Credit Facility | — | — | ||||||||||||||||||
| Term Loan Facility | 2,200 | 2,700 | ||||||||||||||||||
U.S. Dollar Denominated Senior Unsecured Notes (1) | 5,988 | 5,887 | ||||||||||||||||||
Canadian Dollar Senior Unsecured Notes | 2,450 | 2,450 | ||||||||||||||||||
| Total Debt Principal | 10,638 | 11,037 | ||||||||||||||||||
| Debt Premiums (Discounts), Net, and Transaction Costs | (5) | (5) | ||||||||||||||||||
| Long-Term Debt | 10,633 | 11,032 | ||||||||||||||||||
| Less: Current Portion | — | — | ||||||||||||||||||
| Long-Term Portion | 10,633 | 11,032 | ||||||||||||||||||
(1)Total U.S. dollar denominated unsecured notes as at March 31, 2026, was US$4.3 billion (December 31, 2025 — US$4.3 billion).
As at March 31, 2026, the Company had in place a committed credit facility that consists of a $3.3 billion tranche maturing on September 19, 2029, and a $2.2 billion tranche maturing on September 19, 2028. As at March 31, 2026, no amount was drawn on the credit facility (December 31, 2025 – $nil).
As at March 31, 2026, the Company had in place a $2.2 billion term loan facility maturing on February 28, 2029. In the three months ended March 31, 2026, the Company repaid $500 million under the term loan facility. Subsequent to March 31, 2026, the Company repaid an additional $700 million under the term loan facility.
The committed credit facility and term loan facility may include Canadian Overnight Repo Rate Average loans, Secured Overnight Financing Rate loans, prime rate loans and U.S. Base Rate loans.
As at March 31, 2026, the Company was in compliance with all of the terms of its debt agreements. Under the terms of Cenovus’s committed credit facility and term loan 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 below this limit.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 15 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
C) Capital Structure
Cenovus’s capital structure consists of shareholders’ equity and Net Debt. Net Debt includes the Company’s short-term borrowings, and the current and long-term portions of long-term debt, net of cash and cash equivalents, and short-term investments. Net Debt is used in managing the Company’s capital structure. The Company’s objectives when managing its capital structure are to maintain financial flexibility, preserve access to capital markets, ensure its ability to finance internally generated growth and to fund potential acquisitions, while maintaining the ability to meet the Company’s financial obligations as they come due. To ensure financial resilience, Cenovus may, among other actions, adjust capital and operating spending, steward working capital, draw down on its credit facilities or repay existing debt, adjust dividends paid to shareholders, purchase the Company’s common shares for cancellation, issue new debt, or issue new shares.
Cenovus monitors its capital structure and financing requirements using, among other things, Total Debt, Net Debt to adjusted earnings before interest, taxes and depreciation, depletion and amortization (“Adjusted EBITDA”), Net Debt to Adjusted Funds Flow and Net Debt to Capitalization. These measures are used to steward Cenovus’s overall debt position as measures of Cenovus’s overall financial strength.
Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times and Net Debt at or below $4.0 billion over the long-term at a West Texas Intermediate (“WTI”) price of US$45.00 per barrel. These measures may fluctuate periodically outside this range due to factors such as persistently high or low commodity prices or the strengthening or weakening of the Canadian dollar relative to the U.S. dollar.
Net Debt to Adjusted EBITDA
| March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
| Current Portion of Long-Term Debt | — | — | |||||||||
| Long-Term Portion of Long-Term Debt | 10,633 | 11,032 | |||||||||
| Total Debt | 10,633 | 11,032 | |||||||||
| Less: Cash and Cash Equivalents | (2,575) | (2,740) | |||||||||
| Net Debt | 8,058 | 8,292 | |||||||||
| Net Earnings (Loss) | 4,641 | 3,930 | |||||||||
| Add (Deduct): | |||||||||||
| Finance Costs, Net | 627 | 569 | |||||||||
| Income Tax Expense (Recovery) | 790 | 547 | |||||||||
| Depreciation, Depletion and Amortization | 5,349 | 5,192 | |||||||||
| Exploration and Evaluation Asset Write-downs | 30 | 25 | |||||||||
| (Income) Loss From Equity-Accounted Affiliates | (75) | (53) | |||||||||
| Unrealized (Gain) Loss on Risk Management | (39) | (15) | |||||||||
| Foreign Exchange (Gain) Loss, Net | (182) | (361) | |||||||||
| (Gain) Loss on Divestiture of Assets | (173) | (87) | |||||||||
| Other (Income) Loss, Net | (147) | (115) | |||||||||
Adjusted EBITDA (1) | 10,821 | 9,632 | |||||||||
Net Debt to Adjusted EBITDA (times) | 0.7 | 0.9 | |||||||||
(1)Calculated on a trailing twelve-month basis.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 16 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
Net Debt to Adjusted Funds Flow
| March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
| Net Debt | 8,058 | 8,292 | |||||||||
| Cash From (Used in) Operating Activities | 9,094 | 8,228 | |||||||||
| (Add) Deduct: | |||||||||||
| Settlement of Decommissioning Liabilities | (297) | (280) | |||||||||
| Net Change in Non-Cash Working Capital | (645) | (363) | |||||||||
Adjusted Funds Flow (1) | 10,036 | 8,871 | |||||||||
Net Debt to Adjusted Funds Flow (times) | 0.8 | 0.9 | |||||||||
(1)Calculated on a trailing twelve-month basis.
Net Debt to Capitalization
| March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
| Net Debt | 8,058 | 8,292 | |||||||||
Shareholders’ Equity | 32,517 | 31,622 | |||||||||
| Capitalization | 40,575 | 39,914 | |||||||||
Net Debt to Capitalization (percent) | 20 | 21 | |||||||||
13. DECOMMISSIONING LIABILITIES | ||
| Total | |||||
As at December 31, 2025 | 4,872 | ||||
| Liabilities Incurred | 8 | ||||
| Liabilities Settled | (53) | ||||
Unwinding of Discount on Decommissioning Liabilities (Note 5) | 64 | ||||
| Exchange Rate Movements | 10 | ||||
As at March 31, 2026 | 4,901 | ||||
As at March 31, 2026, the undiscounted amount of estimated future cash flows required to settle the obligation was discounted using a credit-adjusted risk-free rate of 5.5 percent (December 31, 2025 – 5.5 percent) and assumes an inflation rate of two percent (December 31, 2025 – two percent).
14. OTHER LIABILITIES | ||
| March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
Renewable Volume Obligation, Net (1) | 282 | 235 | |||||||||
| Pension and Other Post-Employment Benefit Plan | 259 | 260 | |||||||||
| Employee Long-Term Incentives | 155 | 169 | |||||||||
| Provisions for Onerous and Unfavourable Contracts | 76 | 83 | |||||||||
| Other | 170 | 142 | |||||||||
| 942 | 889 | ||||||||||
(1)The gross amounts of the renewable volume obligation and renewable identification numbers (“RINs”) asset were $1.1 billion and $837 million, respectively (December 31, 2025 – $853 million and $618 million, respectively).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 17 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
15. 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, 2026 | December 31, 2025 | ||||||||||||||||||||||
Number of Common Shares (thousands) | Amount | Number of Common Shares (thousands) | Amount | ||||||||||||||||||||
| Outstanding, Beginning of Year | 1,883,400 | 18,599 | 1,825,038 | 15,659 | |||||||||||||||||||
Issued Under the MEG Acquisition, Net of Issuance Costs (Note 4) | — | — | 143,935 | 3,667 | |||||||||||||||||||
| Issued Upon Exercise of Warrants | 536 | 5 | 2,471 | 24 | |||||||||||||||||||
| Issued Under Stock Option Plans | 2,599 | 54 | 1,394 | 20 | |||||||||||||||||||
| Purchase of Common Shares Under NCIB | (11,534) | (114) | (89,438) | (771) | |||||||||||||||||||
| Outstanding, End of Period | 1,875,001 | 18,544 | 1,883,400 | 18,599 | |||||||||||||||||||
As at March 31, 2026, there were 22.2 million common shares available for future issuance under the stock option plan.
C) Normal Course Issuer Bid
On November 7, 2025, the Company received approval from the TSX to renew the Company’s NCIB program to purchase up to 120.3 million common shares during the period from November 11, 2025, to November 10, 2026.
For the three months ended March 31, 2026, the Company purchased and cancelled 11.5 million common shares through the NCIB. The common shares were purchased at a volume weighted average price of $30.35 per common share for a total of $350 million. Retained earnings was reduced by $242 million, of which $236 million represents the excess of the purchase price of the common shares over their average carrying value and $6 million relates to share buyback tax.
From April 1, 2026, to May 1, 2026, the Company purchased an additional 7.3 million common shares for $264 million. As at May 1, 2026, the Company can further purchase up to 94.1 million common shares under the NCIB.
D) Treasury Shares
Cenovus has an employee benefit plan trust (the “Trust”). The Trust, through an independent trustee, acquires Cenovus’s common shares on the open market, which are held to satisfy the Company’s obligations under certain stock-based compensation plans.
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
Number of Common Shares (thousands) | Amount | Number of Common Shares (thousands) | Amount | ||||||||||||||||||||
| Outstanding, Beginning of Year | 5,258 | 116 | 2,000 | 43 | |||||||||||||||||||
| Purchased Under Employee Benefit Plan | 1,800 | 51 | 7,100 | 155 | |||||||||||||||||||
| Distributed Under Employee Benefit Plan | (3,559) | (80) | (3,842) | (82) | |||||||||||||||||||
| Outstanding, End of Period | 3,499 | 87 | 5,258 | 116 | |||||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 18 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
E) Issued and Outstanding – Preferred Shares
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
Number of Preferred Shares (thousands) | Amount | Number of Preferred Shares (thousands) | Amount | ||||||||||||||||||||
| Outstanding, Beginning of Year | 12,000 | 113 | 26,000 | 356 | |||||||||||||||||||
| Preferred Shares Redeemed | (12,000) | (113) | (14,000) | (243) | |||||||||||||||||||
| Outstanding, End of Period | — | — | 12,000 | 113 | |||||||||||||||||||
On March 31, 2026, Cenovus exercised its right to redeem all 10.7 million of the Company’s series 1 preferred shares, and all 1.3 million of the Company’s series 2 preferred shares. The preferred shares were redeemed at a price of $25.00 per share, for a total of $300 million. Retained earnings was reduced by $187 million, representing the excess of the purchase price of the preferred shares over their carrying value.
F) Issued and Outstanding – Warrants
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
Number of Warrants (thousands) | Amount | Number of Warrants (thousands) | Amount | ||||||||||||||||||||
| Outstanding, Beginning of Year | 1,172 | 4 | 3,643 | 12 | |||||||||||||||||||
| Exercised | (536) | (2) | (2,471) | (8) | |||||||||||||||||||
| Expired | (636) | (2) | — | — | |||||||||||||||||||
| Outstanding, End of Period | — | — | 1,172 | 4 | |||||||||||||||||||
The exercise price of the warrants was $6.54 per share. The warrants expired on January 1, 2026.
16. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ||
| Pension and Other Post-Employment Benefits | Private Equity Investments | Foreign Currency Translation Adjustment | Total | ||||||||||||||||||||
As at December 31, 2024 | 69 | 156 | 2,088 | 2,313 | |||||||||||||||||||
| Other Comprehensive Income (Loss), Before Tax | 3 | (2) | (10) | (9) | |||||||||||||||||||
| Income Tax (Expense) Recovery | (1) | — | — | (1) | |||||||||||||||||||
As at March 31, 2025 | 71 | 154 | 2,078 | 2,303 | |||||||||||||||||||
As at December 31, 2025 | 86 | 131 | 184 | 401 | |||||||||||||||||||
| Other Comprehensive Income (Loss), Before Tax | 5 | 1 | 244 | 250 | |||||||||||||||||||
| Income Tax (Expense) Recovery | (1) | — | — | (1) | |||||||||||||||||||
As at March 31, 2026 | 90 | 132 | 428 | 650 | |||||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 19 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
17. STOCK-BASED COMPENSATION PLANS | ||
Cenovus has a number of stock-based compensation plans that include net settlement rights (“NSRs”), performance share units (“PSUs”), restricted share units (“RSUs”) and deferred share units.
The following tables summarize information related to the Company’s stock-based compensation plans:
Units Outstanding | Units Exercisable | ||||||||||
As at March 31, 2026 | (thousands) | (thousands) | |||||||||
| Stock Options With Associated Net Settlement Rights | 10,948 | 4,414 | |||||||||
| Performance Share Units | 7,810 | — | |||||||||
| Restricted Share Units | 11,256 | — | |||||||||
| Deferred Share Units | 2,080 | 2,080 | |||||||||
The weighted average exercise price of NSRs outstanding as at March 31, 2026, was $22.73.
Units Granted | Units Vested and Exercised/ Paid Out | ||||||||||
For the three months ended March 31, 2026 | (thousands) | (thousands) | |||||||||
| Stock Options With Associated Net Settlement Rights | 2,685 | 2,599 | |||||||||
| Performance Share Units | 2,368 | 1,982 | |||||||||
| Restricted Share Units | 2,561 | 3,035 | |||||||||
| Deferred Share Units | 356 | 122 | |||||||||
Weighted Average Exercise Price | Units Exercised | ||||||||||
For the three months ended March 31, 2026 | ($/unit) | (thousands) | |||||||||
| Stock Options With Associated Net Settlement Rights Exercised for Net Cash Payment | 17.51 | 2,344 | |||||||||
Stock Options With Associated Net Settlement Rights Exercised and Net Settled for Common Shares (1) | 11.53 | 255 | |||||||||
(1)NSRs were net settled for 255 thousand common shares.
The following table summarizes the stock-based compensation expense (recovery) recorded for all plans:
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Stock Options With Associated Net Settlement Rights | 4 | 3 | |||||||||||||||||||||
| Cenovus Replacement Stock Options | — | (2) | |||||||||||||||||||||
| Performance Share Units | 98 | 10 | |||||||||||||||||||||
| Restricted Share Units | 113 | 14 | |||||||||||||||||||||
| Deferred Share Units | 37 | 1 | |||||||||||||||||||||
| Stock-Based Compensation Expense (Recovery) | 252 | 26 | |||||||||||||||||||||
PSUs and RSUs granted under the Performance Share Unit Plan and Restricted Share Unit Plan for Local Employees in the Asia Pacific region may only be settled in cash.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 20 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
18. RELATED PARTY TRANSACTIONS | ||
Husky Midstream Limited Partnership
The Company jointly owns and is the operator of HMLP and applies the equity method of accounting. The Company charges HMLP for construction and management services, and incurs costs for the use of HMLP’s pipeline systems, as well as transportation and storage services. Access fees and transportation and storage services are based on contractually agreed rates with HMLP.
The following table summarizes revenues and associated expenses related to HMLP:
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Revenues from Construction and Management Services | 33 | 29 | |||||||||||||||||||||
| Transportation Expenses | 65 | 68 | |||||||||||||||||||||
19. FINANCIAL INSTRUMENTS | ||
Cenovus’s financial assets and financial liabilities consist of cash and cash equivalents, accounts receivable and accrued revenues, restricted cash, risk management assets and liabilities, accounts payable and accrued liabilities, lease liabilities, long-term debt, certain portions of other assets and certain portions of 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, and accounts payable and accrued liabilities approximate their carrying amount due to the short-term maturity of these instruments.
The fair values of restricted cash, certain portions of other assets and certain portions of other liabilities approximate their carrying amount due to the specific non-tradeable nature of these instruments.
Long-term debt is carried at amortized cost. The estimated fair value of long-term debt was determined based on period-end trading prices of long-term debt on the secondary market (Level 2). As at March 31, 2026, the carrying value of Cenovus’s long-term debt was $10.6 billion and the fair value was $10.2 billion (December 31, 2025, carrying value – $11.0 billion; fair value – $10.6 billion).
The Company classifies certain private equity investments as FVOCI as they are not held for trading and fair value changes are not reflective of the Company’s operations. These assets are carried at fair value in other assets. Fair value is determined based on recent market activity which may include equity transactions of the entity when available (Level 3).
The following table provides a reconciliation of changes in the fair value of private equity investments held and classified as FVOCI during the period:
| Total | |||||||||||
| As at December 31, 2025 | 193 | ||||||||||
| Acquisitions | 1 | ||||||||||
Changes in Fair Value | 1 | ||||||||||
| As at March 31, 2026 | 195 | ||||||||||
B) Fair Value of Risk Management Assets and Liabilities
Risk management assets and liabilities are carried at fair value in accounts receivable and accrued revenues, accounts payable and accrued liabilities (for short-term positions), and other assets and other liabilities (for long-term positions). Changes in fair value are recorded in (gain) loss on risk management.
The Company’s risk management assets and liabilities consist of condensate and refined product futures; crude oil and natural gas futures and swaps; and renewable power, power and foreign exchange contracts. The Company may also enter into forwards and options to manage commodity, foreign exchange and interest rate exposures.
Crude oil, natural gas, condensate, refined products and power contracts are recorded at their estimated fair value based on the difference between the contracted price and the period-end forward price for the same commodity, using quoted market prices or the period-end forward price for the same commodity, extrapolated to the end of the term of the contract (Level 2). The fair value of foreign exchange rate contracts is calculated using external valuation models that incorporate observable market data and foreign exchange forward curves (Level 2).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 21 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
The fair value of renewable power contracts is calculated using internal valuation models that incorporate broker pricing for relevant markets, some observable market prices and extrapolated market prices with inflation assumptions (Level 3). The fair value of renewable power contracts are calculated by Cenovus’s internal valuation team, which consists of individuals who are knowledgeable and have experience in fair value techniques.
Summary of Risk Management Positions
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
| Risk Management | Risk Management | ||||||||||||||||||||||||||||||||||
| As at | Asset | Liability | Net | Asset | Liability | Net | |||||||||||||||||||||||||||||
| Crude Oil, Condensate, Natural Gas and Refined Products | 437 | 385 | 52 | 27 | 30 | (3) | |||||||||||||||||||||||||||||
| Power Contracts | 3 | — | 3 | 2 | — | 2 | |||||||||||||||||||||||||||||
| Renewable Power Contracts | — | 41 | (41) | 17 | 6 | 11 | |||||||||||||||||||||||||||||
| Foreign Exchange Rate Contracts | — | 2 | (2) | — | — | — | |||||||||||||||||||||||||||||
| 440 | 428 | 12 | 46 | 36 | 10 | ||||||||||||||||||||||||||||||
| March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
| Level 2 – Prices Sourced From Observable Data or Market Corroboration | 53 | (1) | |||||||||
| Level 3 – Prices Sourced From Partially Unobservable Data | (41) | 11 | |||||||||
| 12 | 10 | ||||||||||
The following table provides a reconciliation of changes in the fair value of Cenovus’s risk management assets and liabilities:
| Total | |||||||||||
| As at December 31, 2025 | 10 | ||||||||||
Change in Fair Value of Contracts in Place, Beginning of Year | (21) | ||||||||||
| Change in Fair Value of Contracts Entered Into During the Period | 13 | ||||||||||
| Fair Value of Contracts Realized During the Period | 10 | ||||||||||
| As at March 31, 2026 | 12 | ||||||||||
C) Earnings Impact of (Gains) Losses From Risk Management Positions
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Realized (Gain) Loss | 10 | (8) | |||||||||||||||||||||
| Unrealized (Gain) Loss | (1) | 23 | |||||||||||||||||||||
(Gain) Loss on Risk Management | 9 | 15 | |||||||||||||||||||||
Realized and unrealized gains and losses on risk management are recorded in the reportable segment to which the derivative instrument relates.
20. RISK MANAGEMENT | ||
Cenovus is exposed to financial risks, including market risk related to commodity prices, foreign exchange rates, interest rates and commodity power prices, as well as credit risk and liquidity risk.
As at March 31, 2026, the fair value of risk management positions was a net asset of $12 million. As at March 31, 2026, there were foreign exchange contracts with a notional value of US$235 million and no interest rate contracts outstanding. As at December 31, 2025, there were no foreign exchange contracts or interest rate contracts outstanding.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 22 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
Net Fair Value of Risk Management Positions
As at March 31, 2026 | Notional Volumes (1) (2) | Terms | Weighted Average Price (2) | Fair Value Asset (Liability) | |||||||||||||||||||
WTI Contracts Related to Blending (3) | |||||||||||||||||||||||
| WTI Fixed – Sell | 9.7 MMbbls | April 2026 - June 2027 | US$63.57/bbl | (351) | |||||||||||||||||||
| WTI Fixed – Buy | 0.8 MMbbls | April 2026 - December 2027 | US$73.96/bbl | 3 | |||||||||||||||||||
| Power Contracts | 3 | ||||||||||||||||||||||
| Renewable Power Contracts | (41) | ||||||||||||||||||||||
Other Financial Positions (4) | 400 | ||||||||||||||||||||||
| Foreign Exchange Rate Contracts | (2) | ||||||||||||||||||||||
| Total Fair Value | 12 | ||||||||||||||||||||||
(1) Million barrels (“MMbbls”).
(2) Notional volumes and weighted average price are based on multiple contracts of varying amounts and terms over the respective time period; therefore, the notional volumes and weighted average price may fluctuate from month to month.
(3) WTI futures contracts are used to help manage price exposure to condensate used for blending. Includes individual WTI contracts with varying terms, the longest of which is 21 months.
(4) Includes risk management positions related to Western Canadian Select at Hardisty (“WCS”), heavy oil, light oil and condensate differentials, benchmark delivery location spreads, Belvieu and heating oil fixed price contracts, natural gas basis and fixed price contracts, and reformulated blendstock for oxygenate blending gasoline contracts.
A) Commodity Price and Foreign Exchange Rate Risk
Sensitivities
The following table summarizes the sensitivity of the fair value of Cenovus’s risk management positions to independent fluctuations in commodity prices and foreign exchange rates, with all other variables held constant. Management believes the fluctuations identified in the table below are a reasonable measure of volatility.
The impact of fluctuating commodity prices and foreign exchange rates on the Company’s open risk management positions could have resulted in an unrealized gain (loss) impacting earnings before income tax as follows:
As at March 31, 2026 | Sensitivity Range | Increase | Decrease | |||||||||||
| Crude Oil and Condensate Commodity Price | ± US$30.00/bbl Applied to WTI, Condensate and Related Hedges | — | — | |||||||||||
Crude Oil and Condensate Differential Price (1) | ± US$2.50/bbl Applied to Differential Hedges Tied to Production | 5 | (5) | |||||||||||
| WCS (Hardisty) Differential Price | ± US$2.50/bbl Applied to WCS Differential Hedges Tied to Production | (5) | 5 | |||||||||||
| Refined Products Commodity Price | ± US$30.00/bbl Applied to Heating Oil and Gasoline Hedges | (17) | 17 | |||||||||||
| Natural Gas Commodity Price | ± US$0.50/Mcf (2) Applied to Natural Gas Hedges | — | — | |||||||||||
| Natural Gas Basis Price | ± US$0.50/Mcf Applied to Natural Gas Basis Hedges | (3) | 3 | |||||||||||
| Power Commodity Price | ± C$10.00/MWh (3) Applied to Power Hedges | 38 | (38) | |||||||||||
| U.S. to Canadian Dollar Exchange Rate | ± $0.05 in the U.S. to Canadian Dollar Exchange Rate | 21 | (24) | |||||||||||
(1)Excluding WCS at Hardisty.
(2)One thousand cubic feet (“Mcf”).
(3)One thousand kilowatts of electricity per hour (“MWh”).
B) Credit Risk
Credit risk arises from the potential that the Company may incur a financial loss if a counterparty to a financial instrument fails to meet its financial or performance obligations in accordance with agreed terms. Cenovus assesses the credit risk of new counterparties and continues risk-based monitoring of all counterparties on an ongoing basis. A substantial portion of Cenovus’s accounts receivable are with customers in the oil and gas industry and are subject to normal industry credit risks.
As at March 31, 2026, approximately 82 percent (December 31, 2025 – 81 percent) of the Company’s accounts receivable and accrued revenues were with investment grade counterparties, and 99 percent of the Company’s accounts receivable were outstanding for less than 60 days. The associated average expected credit loss on these accounts was 0.3 percent as at March 31, 2026 (December 31, 2025 – 0.3 percent).
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 23 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
C) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet all of its financial obligations as they become due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price.
As disclosed in Note 12, over the long term, Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times at a WTI price of US$45.00 per barrel to manage the Company’s overall debt position.
Undiscounted cash outflows relating to financial liabilities are:
As at March 31, 2026 | Less than 1 Year | Years 2 and 3 | Years 4 and 5 | Thereafter | Total | ||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities | 6,691 | — | — | — | 6,691 | ||||||||||||||||||||||||
Long-Term Debt (1) | 475 | 4,349 | 1,627 | 9,072 | 15,523 | ||||||||||||||||||||||||
Lease Liabilities (1) | 521 | 906 | 671 | 2,653 | 4,751 | ||||||||||||||||||||||||
(1)Principal and interest, including current portion, if applicable.
21. SUPPLEMENTARY CASH FLOW INFORMATION | ||
A) Working Capital
| March 31, | December 31, | ||||||||||
| As at | 2026 | 2025 | |||||||||
| Total Current Assets | 11,477 | 9,890 | |||||||||
| Total Current Liabilities | 7,330 | 6,314 | |||||||||
| Working Capital | 4,147 | 3,576 | |||||||||
B) Changes in Non-Cash Working Capital
For the three months ended March 31, | 2026 | 2025 | |||||||||||||||||||||
| Accounts Receivable and Accrued Revenues | (1,188) | (95) | |||||||||||||||||||||
| Income Tax Receivable | 323 | (78) | |||||||||||||||||||||
| Inventories | (754) | 160 | |||||||||||||||||||||
| Accounts Payable and Accrued Liabilities | 308 | (541) | |||||||||||||||||||||
| Income Tax Payable | 167 | (330) | |||||||||||||||||||||
| Total Change in Non-Cash Working Capital | (1,144) | (884) | |||||||||||||||||||||
| Net Change in Non-Cash Working Capital – Operating Activities | (1,143) | (861) | |||||||||||||||||||||
| Net Change in Non-Cash Working Capital – Investing Activities | (1) | (23) | |||||||||||||||||||||
| Total Change in Non-Cash Working Capital | (1,144) | (884) | |||||||||||||||||||||
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 24 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
C) Reconciliation of Liabilities
The following table provides a reconciliation of liabilities to cash flows arising from financing activities:
| Dividends Payable | Repurchase Agreements Payable | Short-Term Borrowings | Long-Term Debt | Lease Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||||
As at December 31, 2024 | — | — | 173 | 7,534 | 2,927 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Acquisition | — | — | — | 12 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Changes From Financing Cash Flows: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Issuance (Repayment) of Short-Term Borrowings | — | — | 150 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Proceeds on Repurchase Agreements | — | 300 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Repayment of Long-Term Debt | — | — | — | (12) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Principal Repayment of Leases | — | — | — | — | (83) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Paid | (333) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Cash Changes: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance and Transaction Costs | — | — | — | (5) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Lease Additions | — | — | — | — | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base Dividends Declared on Common Shares | 327 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Declared on Preferred Shares | 6 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange Rate Movements and Other | — | — | — | (5) | 59 | ||||||||||||||||||||||||||||||||||||||||||||||||
| As at March 31, 2025 | — | 300 | 323 | 7,524 | 2,925 | ||||||||||||||||||||||||||||||||||||||||||||||||
As at December 31, 2025 | — | 401 | — | 11,032 | 3,175 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Changes From Financing Cash Flows: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Repayment of Long-Term Debt | — | — | — | (500) | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Principal Repayment of Leases | — | — | — | — | (90) | ||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds on Repurchase Agreements (1) | — | 723 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Repayment of Repurchase Agreements (1) | — | (429) | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Paid | (379) | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Non-Cash Changes: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance and Transaction Costs | — | — | — | 2 | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Lease Additions | — | — | — | — | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Lease Modifications | — | — | — | — | 6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Base Dividends Declared on Common Shares | 377 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends Declared on Preferred Shares | 2 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange Rate Movements and Other | — | 17 | — | 99 | 15 | ||||||||||||||||||||||||||||||||||||||||||||||||
As at March 31, 2026 | — | 712 | — | 10,633 | 3,119 | ||||||||||||||||||||||||||||||||||||||||||||||||
(1)Includes proceeds and repayments of $464 million and $269 million, respectively, that primarily relate to RINs.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 25 | ||||
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2026
22. COMMITMENTS AND CONTINGENCIES | ||
A) Commitments
Cenovus has entered into various commitments in the normal course of operations. Commitments that have original maturities less than one year are excluded from the table below. Future payments for the Company’s commitments are below:
As at March 31, 2026 | Remainder of Year | 2 Years | 3 Years | 4 Years | 5 Years | Thereafter | Total | ||||||||||||||||||||||||||||||||||
Transportation and Storage (1) (2) | 1,976 | 2,658 | 2,835 | 2,853 | 2,578 | 23,783 | 36,683 | ||||||||||||||||||||||||||||||||||
Real Estate | 48 | 64 | 66 | 70 | 70 | 474 | 792 | ||||||||||||||||||||||||||||||||||
Obligation to Fund HCML | 76 | 95 | 55 | 43 | 42 | 59 | 370 | ||||||||||||||||||||||||||||||||||
| Other Long-Term Commitments | 472 | 188 | 153 | 123 | 118 | 489 | 1,543 | ||||||||||||||||||||||||||||||||||
Total Commitments | 2,572 | 3,005 | 3,109 | 3,089 | 2,808 | 24,805 | 39,388 | ||||||||||||||||||||||||||||||||||
(1)Includes transportation commitments that are subject to regulatory approval or were approved but are not yet in service of $7.8 billion. Terms are up to 15 years on commencement.
(2)As at March 31, 2026, includes $1.8 billion related to transportation and storage commitments with HMLP.
There were outstanding letters of credit aggregating to $372 million (December 31, 2025 – $341 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 interim Consolidated Financial Statements.
Income Tax Matters
The tax regulations and legislation and interpretations thereof in the various jurisdictions in which Cenovus operates are continually changing. As a result, there are usually a number of tax matters under review. Management believes that the provision for taxes is adequate.
Cenovus Energy Inc. – Q1 2026 Interim Consolidated Financial Statements | 26 | ||||
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Jonathan M. McKenzie, 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, 2026.
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: The issuer has disclosed in its interim MD&A
(a) the fact that the issuer's other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
(b) summary financial information about the business that the issuer acquired that has been proportionately consolidated or consolidated in the issuer's financial statements.
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, 2026 and ended on March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: May 6, 2026
/s/ Jonathan M. McKenzie
Jonathan M. McKenzie
President & Chief Executive Officer
Exhibit 99.5
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Karamjit S. Sandhar, 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, 2026.
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: The issuer has disclosed in its interim MD&A
(a) the fact that the issuer's other certifying officer(s) and I have limited the scope of our design of DC&P and ICFR to exclude controls, policies and procedures of a business that the issuer acquired not more than 365 days before the last day of the period covered by the interim filings; and
(b) summary financial information about the business that the issuer acquired that has been proportionately consolidated or consolidated in the issuer's financial statements.
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, 2026 and ended on March 31, 2026 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.
Date: May 6, 2026
/s/ Karamjit S. Sandhar
Karamjit S. Sandhar
Executive Vice-President & Chief Financial Officer