Cenovus Energy announces higher earnings despite lower production

Cenovus Energy announced Tuesday a huge jump in its second quarter earnings as higher sale prices, refining and hedging gains boosted the bottom line, despite producing less oil. For the three months ending June 30, the company's net earnings were $685 million, compared to $183 million one year ago. Revenues were $4 billion for the second quarter, up from $3.1 billion in 2010. Refining operations in Illinois and Texas produced 422,000 barrels per day, adding $307 million to income for the quarter, compared to a loss of $41 million a year ago.

Oil production was down 17 per cent at Pelican Lake in northern Alberta as a result of a wild fire that forced the closure of a pipeline serving the facility. Production in Saskatchewan's Weyburn oilfield was also down 12 per cent because of power outages.

Despite the lower production in the second quarter, total oil volume remains at about 130,000 barrels a day, a figure the company is "comfortable" with, according to CEO Brian Ferguson. He said that the company is looking forward to increased production from its oil sands projects at Foster Creek and Christina Lake, currently producing 58,000 barrels a day. Expansion of the Christina Lake project is expected to begin production in 2013, with capacity increasing to 98,000 barrels a day.

In an updated ten-year strategic plan, Cenovus now expects total oil production of 500,000 barrels a day by 2021.