Cenovus sees 14 per cent production bump in 2013, to miss 2012 cash flow targets

CALGARY – Cenovus Energy Inc. expects to grow oil production by 14 per cent next year, mainly thanks to expansion at its Christina Lake oilsands project in northern Alberta.

Output is expected to range between 180,000 and 196,000 barrels of oil equivalent per day, compared with the rate of 165,000 Cenovus expects to end 2012 producing.

Capital spending next year is expected to be between $3.2 billion and $3.6 billion, largely steady with what Cenovus expects to have spent in 2012.

Meanwhile, this year’s cash flow is now forecast to come in lower than Cenovus (TSX:CVE) had previously anticipated because of lower crude prices, longer than expected maintenance downtime at U.S. refineries and a one-time cash tax expense.

For all of 2012, cash flow is expected to be $3.7 billion, missing the range of $3.9 billion to $4.1 billion Cenovus forecast in October.

Cenovus shares were off about 2.65 per cent to $33.03 in mid-morning trading Wednesday on the Toronto Stock Exchange.

The company says the fourth phase of its steam-driven Christina Lake operation should hit full capacity around the middle of next year, when the project is expected to be producing 98,000 barrels per day. Later in the year, another expansion is expected to add an additional 40,000 barrels of daily output.

“The anticipated increase in oil production for next year keeps us on track to reach our target of 500,000 barrels per day of net oil production by the end of 2021,” said chief operating officer John Brannan.

“The ability of our staff to reduce oilsands project startup times and continuously improve our production techniques while successfully advancing new projects gives me the confidence that we’ll continue to reach our milestones and maintain our status as a low-cost developer and operator of oilsands projects.”

Operational costs next year are expected to be slightly higher, as prices of natural gas, electricity and chemicals are expected to rise.