Cenovus Energy Inc. (NYSE:CVE) Q2 2017 Earnings Conference Call - Preliminary Transcript

Jul 27, 2017 • 11:00 am ET

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Cenovus Energy Inc. (NYSE:CVE) Q2 2017 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to Cenovus Energys Second Quarter 2017 Financial and Operating Results. As a reminder, today's call is being recorded. [Operator Instructions]. Please be advised that this conference call may not be recorded or rebroadcast without the expressed consent of Cenovus Energy.

I would now like to turn the conference call over to Mr. Kam Sandhar, Vice President, Investor Relations and Corporate Development. Please go ahead, Mr. Sandhar.

Executive
Kam Sandhar

Thank you, operator and welcome everyone to our second quarter of 2017 results conference call. I would like to refer you to the advisories located at the end of today's news release. These advisories describe the forward-looking information, non-GAAP measures and oil and gas terms referred to today and outline the risk factors and assumptions relevant to this discussion. Additional information is available in our Q2 MD&A and our most recent annual information form or Form 40-F.

The quarterly results have been presented in Canadian dollars and on a before-royalties basis. We've also posted a link to our quarterly results on our website at cenovus.com.

Brian Ferguson, our President and CEO, will provide brief comments and then we'll turn to the Q&A portion of the call with Cenovus leadership team. Please go ahead, Brian.

Executive
Brian Ferguson

Thanks, Kam. Good morning. I'm pleased to report another solid operational quarter for Cenovus. This strong performance includes an initial contribution from the assets we have acquired from ConocoPhillips and the transaction which closed on May 17. In a volatile commodity price environment, economies of scale are important and the acquisition has roughly doubled the scale of our company and improved our sustainability. This is demonstrated by the CAD465 million of free funds flow that we generated in the second quarter. Despite the acquired assets contributing only 45 days to the results, this is a strong start and we believe it underscores the value and potential in these assets and in our company.

Christina Lake continues to be best-in-class. Production in the second quarter averaged more than 153,000 barrels per day and over 205,000 barrels per day in June based on our 100% ownership. As we have previously discussed, phase F started up in the fourth quarter of last year and ramped up within 4 months contributing strong volumes in 2017. Foster Creek production averaged 108,000 barrels per day in the second quarter. During the quarter, we safely and successfully executed the largest turnaround in the company's history within budget. Phases A through E representing approximately 120,000 barrels per day of production capacity was successfully brought down for 20 days including several days of ramp down and ramp back up. Following completion of the turnaround, production returned to normal levels averaging approximately 166,000 barrels per day in June, again based on 100% ownership which is about 92% capacity utilization.

Non-fuel operating costs at Christina Lake were CAD4.66 per barrel, about 5% lower in the second quarter compared with the same quarter of last year. This was primarily driven by