Cenovus Energy Inc. (NYSE:CVE) Q4 2018 Earnings Conference Call Transcript

Feb 13, 2019 • 11:00 am ET

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Cenovus Energy Inc. (NYSE:CVE) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Cenovus Energy's Fourth Quarter and Year-end 2018 results. As a reminder, today's call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session.

(Operator Instructions) Members of the investment community will have the opportunity to ask questions first. At the conclusion of that session, members of the media may then ask questions. 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 Ms. Sherry Wendt, Director, Investor Relations. Please go ahead, Ms. Wendt.

Executive
Sherry Wendt

Thank you, operator and welcome everyone to our fourth quarter and year-end 2018 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 annual MD&A and our most annual -- our most recent Annual Information Form and Form 40-F. The quarterly results have been presented in Canadian dollars and on a before royalties basis. We have also posted our results on our website at cenovus.com. Alex Pourbaix, our President and Chief Executive Officer will provide brief comments and then we will turn to the Q&A portion of the call with Cenovus's leadership team. We ask that you please keep your questions to strategic level and follow up with the Investor Relations team on any modeling questions after the call. Please go ahead Alex.

Executive
Alexander Pourbaix

Thanks, Sherry. I'm pleased to say we had strong operating performance throughout 2018. We also continued to deliver on our commitments to shareholders, demonstrating capital discipline and continuing to reduce debt while maintaining our focus on safe and reliable operations. While our financial results last year were significantly impacted by volatile Canadian commodity prices caused by market access constraints, we remained financially resilient.

We demonstrated significant improvement and cost structures in the oil sands captured the value of integration through our refining assets, improved our market access strategy and made progress on deleveraging our balance sheet Despite severe headwinds. In the fourth quarter when heavy oil differentials were at historic highs of over $40 a barrel and we were proactively decrease in our oil sands production levels in response, we finished the quarter essentially cash flow neutral and continue to reduce our debt.

Our financial resilience is result of all the hard work our teams have put in over the last year looking for ways to further improve how we run our business. In addition to record high differentials our results last year were impacted by large realized hedging losses related to risk management contracts entered in 2017 that have now expired. We reset the pace of our development plan for the Deep Basin, which resulted