Cenovus Energy has delivered a disciplined 2021 capital budget focused on maintaining safe and reliable operations while positioning the company to drive enhanced shareholder value. The budget includes sustaining capital of approximately $2.1 billion to deliver upstream production of approximately 755,000 barrels of oil equivalent per day (BOE/d) and downstream throughput of approximately 525,000 barrels per day (bbls/d).

The budget anticipates Cenovus achieving nearly $1 billion of synergies in 2021 as a result of its recent transaction with Husky Energy, putting the company firmly on track to reach its planned $1.2 billion in annual run-rate synergies by the end of 2021. The budget also includes $520 million to $570 million for the Superior Refinery rebuild, with a substantial portion of the go-forward costs expected to be recovered through insurance proceeds.

“With this budget we’re delivering on the commitments we made when we announced the Husky transaction,” said Alex Pourbaix, Cenovus President & Chief Executive Officer. “In 2021 we’ll remain focused on disciplined capital allocation, investing selectively in the highest return opportunities available in our expanded asset portfolio, and we expect to make significant progress towards achieving our synergy targets.”

2021 budget highlights

• Total upstream production of 730,000 BOE/d to 780,000 BOE/d
• Total downstream throughput of 500,000 bbls/d to 550,000 bbls/d
• Total capital expenditures of $2.3 billion to $2.7 billion

Budget overview

Cenovus’s $1.2 billion synergy target from its combination with Husky includes $600 million in estimated annual corporate and operating synergies and $600 million in estimated capital allocation synergies. The 2021 budget positions the company to achieve about $400 million of the estimated annual corporate and operating synergies and all of the estimated capital allocation synergies this year.

Work to achieve these synergies in 2021 is well underway. This includes consolidating information technology (IT) systems and eliminating other service overlaps, applying Cenovus’s industry-leading practices and processes, including sub-surface optimization techniques, across Husky’s legacy oil sands assets and standardizing field operating models. At the time the transaction with Husky was announced, Cenovus said it would reduce the combined company’s workforce by 20 percent to 25 percent to eliminate role duplication and increase efficiency, and the company has already made significant progress towards that target.

“Our 2021 budget puts us firmly on track to achieve the $1.2 billion in annual run-rate synergies we identified, with nearly $1 billion of that total expected to be achieved this year,” said Pourbaix. “I’m highly confident we will meet or even exceed our target.”

Cenovus remains committed to maintaining and improving its current investment-grade credit ratings. This includes the company’s continued focus on allocating free funds flow to reduce its net debt to less than $10 billion and targeting a longer-term net debt level at or below $8 billion.

Both Cenovus and Husky have demonstrated meaningful improvements in process safety events and total recordable injury frequency over the past three years, and the 2021 budget maintains the combined company’s focus on enhancing safety and asset integrity. A key priority for Cenovus this year is to harmonize safety management systems across the combined business.

The company expects between $500 million and $550 million of one-time integrationrelated costs such as consultation and legal fees, transfer of licensed seismic data, integration of IT systems, severance associated with workforce reductions and change of control obligations.

KeyFacts Energy: Cenovus Canada country profile