* Forecasts 2013 net oil production of 180,000-196,000 bpd
* Expects 2013 capital budget of C$3.2 bln to C$3.6 bln
* Sees phase 4 of Christina Lake project at full capacity in
* Warns that Q4 cash flow will be lower
* Shares down 1.7 pct
CALGARY, Alberta, Dec 12 Cenovus Energy Inc
, Canada's second-largest independent oil producer, said
on Wednesday it will boost spending in 2013 and raise production
by 14 percent as it ramps up output at its northern Alberta oil
It warned, however, that fourth-quarter cash flow will fall
short of targets.
The company forecast net production of 180,000 to 196,000
barrels per day (bpd) of oil in 2013, up from an expected
165,000 bpd this year. It also said it would spend between C$3.2
billion ($3.25 billion) and C$3.6 billion next year, up from
about C$3.35 billion in 2012.
Cenovus warned, however, that recent low prices for heavy
oil from the oil sands would cut into fourth-quarter cash flow,
which it estimated at about C$700 million, or about C$400
million below its previous estimate. It said the lower cash flow
estimate was also a result of higher taxes and longer than
expected turnarounds at the two U.S. refineries it co-owns with
"While we find the big reduction to (fourth-quarter cash
flow) disappointing, it is not a complete surprise given recent
pricing," Andrew Potter, an analyst at CIBC World Markets, said
in a research note. "Additionally, we note that operations
continue to perform well and there is no impact to our ...
Cenovus shares were down 58 Canadian cents at C$33.13 by
midday on Wednesday on the Toronto Stock Exchange
Cenovus said it expects its Christina Lake oil sands project
to reach production capacity of 98,000 bpd when its fourth phase
become fully operational in the second quarter of 2013. The
fifth phase, starting in the third quarter could add 40,000 bpd
The company expects its share of production from the project
to be between 47,000 and 52,000 bpd net in 2013, up 60 percent
from its average forecast for this year.
"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.
Output from conventional oil projects is also expected to
contribute to higher volumes in 2013, the company said.
Cenovus operates the Foster Creek and Christina Lake oil
sands developments in northern Alberta in a 50-50 joint venture
with ConocoPhillips. The two refineries it co-owns with
Phillips 66 are in Illinois and Texas.
The company's share of Foster Creek production is expected
to be flat at about 58,000 bpd next year.
More than half Cenovus's total spending will be focused on
the company's oil sands assets, mainly to expand Foster Creek
and Christina Lake, on test drilling, and to develop its Narrows
Canadian Natural Resources Ltd, Canada's biggest
independent petroleum producer, said last week that it also
plans to boost spending to raise output as it sees strong demand
for Canadian crude in the U.S. market.