Forecast - Production | Capital Markets | Capital Expenditure | Capex Decrease | Capital Expenditure - 2020 | 2020 Guidance

Cenovus Lowers 2020 Capex by 32% to $900MM; Puts Projects on Hold

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Cenovus Energy Inc. is cutting its 2020 capital plans in response to low commodity prices.

The company is reducing its 2020 capital spending by approximately 32% to $900 million (it had originally planned to spend $1.3-1.5 billion).

This is down 31% from 2019 spending levels of $1.3 billion.

Cenovus is also temporarily suspending its crude-by-rail program and deferring final investment decisions on major growth projects.

Production Outlook Also Lowered: It's 2020 oil sands production and total equivalent production expectations have also been reduced by 6% and 5%, respectively:

• 2020 Oil Sands Production: 350-400 Mbbls/d

• 2020 Total Production: 432-486 MBOEPD

Changes to 2020 Ops

Cenovus has also decided to temporarily suspend its crude-by-rail program. Therefore, oil sands production in 2020 is now expected to average between 350,000 barrels per day (bbls/d) and 400,000 bbls/d, approximately 6% lower than the company’s December 9, 2019 guidance for the year.

Capital originally budgeted to progress potential phase H expansions at both Christina Lake and Foster Creek to sanction-ready status this year has been put on hold, and the majority of the remaining planned capital spend at the company’s Deep Basin and Marten Hills operations has been suspended. Modest spending on engineering and permitting for a potential diluent recovery unit (DRU) will be completed, however, in the current environment, Cenovus does not intend to sanction any new projects.

Liquidity

Cenovus currently has liquidity of approximately $4.4 billion, including undrawn credit facility capacity and cash on hand. Under the terms of Cenovus’s committed credit facility, the company is required to maintain a debt to capitalization ratio, as defined in the agreement, not to exceed 65%. The company was well below this limit at the end of 2019, and has no near-term debt maturities.