May 09, 2025 [Reuters]- Shares in Cenovus Energy jumped nearly 10% on Thursday after the Canadian oil and gas producer posted a fall in first-quarter profit but managed to beat Wall Street estimates on the back of higher output and improved refining margins.
The Calgary, Alberta-based company’s U.S.-listed shares were up 9.8% as of mid-day trading. Cenovus’ first-quarter net income fell to C$859 million ($618.79 million) from C$1.18 billion a year earlier, as crude prices declined on uncertainty surrounding the U.S. economy, tariff policies and fears of oversupply.
However, the company’s quarterly profit per share of 47 Canadian cents surpassed analysts’ average estimate of 37 cents per share, according to data compiled by LSEG.
Prior to Thursday’s beat, Cenovus’ profit had trailed analysts’ estimates for much of the past 12 months. In the fourth quarter of 2024, the company had posted a fall in profit in large part due to ongoing weakness in its U.S. refinery division.
In the first quarter, however, Cenovus saw improved reliability from its U.S. refinery operations and also benefited from the return to full operations at its 183,000 barrel-per-day (bpd) Lima, Ohio, refinery following a period of planned maintenance.
Refinery utilization in its Canadian refining segment rose to 104% from 94% a year ago, while it rose to 90% in the U.S. refining segment from 87%.
Its U.S. refinery division was able to improve its share of market capture to 62%, compared with 52% in the fourth quarter, Cenovus said.
Overall, market conditions have improved in the North American refining sector, said CEO Jon McKenzie.
He added that Cenovus’ 160,000-bpd Toledo, Ohio, refinery will wrap up a period of planned maintenance work this quarter, which should help drive continued improved results.
“We expect to see a clear runway for our U.S. refining business to deliver higher performance through the second half of the year,” McKenzie said on a conference call.
The company’s results this quarter are encouraging, but it will need to demonstrate strategic progress in the long-term if it wishes to command a premium valuation, said Kevin Burkett of Burkett Asset Management, which holds shares in Cenovus.
“That includes clearly communicated steps to improve operational consistency in downstream and better articulation of its long-term capital allocation plan,” Burkett said in an email to Reuters.
Cenovus’ total upstream production was 818,900 barrels of oil equivalent per day (boepd) in the first quarter, up from 800,900 boepd a year earlier.
Cenovus confirmed on Tuesday that it had reduced its employee headcount but declined to disclose numbers.
McKenzie also declined on Thursday to put a number on the amount of job losses, but said the company is readjusting its labour force as major capital projects come to an end, as well as to improve competitiveness.
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