Alberta oilsands specialist Cenovus Energy Inc. staged a recovery during the first three months of this year, fueled by its C$3.8 billion ($3 billion) all-stock takeover of Husky Energy Inc.

Cenovus Energy

Oil and natural gas liquids production, 90% dominated by northern Alberta bitumen extraction, jumped by 49% to 620,090 b/d from 416,802 b/d a year earlier.

Oilsands netback prices for heavy crude shot up tenfold to C$26.56/bbl ($21.25/bbl) from C$2.58/bbl ($2.06/bbl) in the year-ago period.

Natural gas output, enhanced by acquired international properties from Husky, grew 2.3-fold to 895 MMcf/d in the first three months of this year from 395 MMcf/d.

Operating costs rose by 47% to C$11.40/bbl (US$9.12/bbl) due to increases inherited from Husky plants plus rising prices for natural gas burned for underground bitumen extraction using steam injections.

On the downstream side, combined Cenovus-Husky refineries in Canada and the United States processed 469,000 b/d in the first quarter. The Calgary firm “initially reduced refinery throughput in the quarter to align with market conditions and later increased throughput towards historical levels, as refined product demand continued to recover.”

Cenovus rated repayment of its C$13.3 billion ($10.6 billion) in debt as a top priority. The company set a 2021 year-end target of reducing the burden to C$10 billion ($8 billion) and an undated, future goal of C$8 billion ($6.4 billion).

Net earnings in 1Q2021 were C$220 million ($176 million) or C10 cents/share (8 cents/share). Year-ago losses were C$1.8 billion ($1.4 billion) or minus C$1.46/share (minus $1.17) in the same period of 2020.

Meanwhile, crosstown oilsands producer Meg Energy Corp. maintained output and cut financial losses during the first three months of this year.

Meg’s production averaged 90,842 b/d in 1Q2021, little changed from 91,557 b/d during the same period of 2020. Meg predicted current output would continue for the rest of 2021.

President Derek Evans described the quarter as “strong from both a financial and operational perspective. We continue to benefit from both the strength in global oil market dynamics as well as structural improvement in heavy oil differentials.” A plant overhaul also “sets us up well for the balance of 2021.”

Corporate marketing results highlighted regional variation in prices fetched by Meg’s blend of heavy crude extracted from the northern Alberta bitumen belt.

At Edmonton, where high industry-wide volumes meet limited sales outlets, the first quarter value of Meg production averaged US$43.62/bbl, up from $23.39 a year earlier.

Delivered to the much larger refining and trading region on the Gulf of Mexico, the same crude fetched a quarterly average of $55.32, versus $40.43 during 1Q2020.

Meanwhile, Meg’s oilsands operating costs edged down by 5% to C$5.25/bbl ($4.20) in the latest period from C$5.51 ($4.41).

Meg reported a 1Q2021 net loss of C$17 million ($13.6 million) or minus C6 cents/share (minus 5 cents). The result compared with a year-ago net loss of C$284 million ($227.2 million) or minus C95 cents/share (minus 76 cents).