(Adds detail and comment on Grand Rapids project in first seven
paragraphs; updates shares.)
CALGARY, Alberta, April 30 Canadian oil sands
producer Cenovus Energy Inc, which on Wednesday
reported a higher-than-expected first-quarter profit, said it
has acquired mothballed processing facilities from a Total-owned
oil sands site, and will use the equipment at its planned Grand
Cenovus, which currently has two oil sands projects, said
the newly acquired facilities will be moved to the Grand Rapids
site from Total's Josyln oil sands development and
will be used to process the first 10,000 barrel per day phase of
what will eventually be a 180,000 bpd development.
"They have been well maintained," John Brannon, chief
operating officer for Cenovus, said on a conference call.
"The exact price of the transaction is confidential, so we
have not disclosed that. But we think it is a huge opportunity
for us to start this project at Grand Rapids with those
facilities. It will help us keep our initial costs down and we
think we can deliver a very good project."
The acquisition of the central processing facility, which
produces steam and processes oil and water, means the first
phase will be smaller than Cenovus' initial plan for a 30,000
bpd development. The company said it will tweak future
expansions to come up to the project's final capacity.
Total ended thermal oil sands production at its Joslyn site
after an over-pressurized well blew up, creating a crater at the
northern Alberta site. A mining project is still planned at
Joslyn by Total, part of a joint venture between the company and
Suncor Energy Inc.
Cenovus said it expects the first phase of Grand Rapids, a
thermal development where steam and solvents will be pumped into
the ground to liquefy tarry bitumen deposits, to begin producing
oil in 2017.
The company's profit jumped to C$247 million ($225.25
million), or 33 Canadian cents per share, in the quarter ended
March 31, from C$171 million, or 23 Canadian cents per share, a
Operating profit, which excludes most one-time items, fell
to C$378 million, or 50 Canadian cents per share, from C$391
million, or 52 Canadian cents per share, a year earlier.
This beat the average analyst estimate of 48 Canadian cents
per share, according to Thomson Reuters I/B/E/S.
The increase was helped by a 48 percent jump in production
at its Christina Lake oil sands project in northern Alberta.
The Calgary-based energy company, which owns Christina Lake
with ConocoPhillips and operates it, said production at
the project rose to an average of 65,738 net barrels per day.
Cenovus also co-owns Foster Creek with Conoco, where
production dropped 2 percent.
The company said its cash flow, a key indicator of its
ability to fund new projects, fell 4 percent to about C$1.2
billion, hurt by "significantly lower" refining margins.
It holds 50 percent stakes in two U.S. refineries owned by
Phillips 66 and Cenovus' refining margins have taken a
hit in the past few quarters, hurt by the narrowing price
difference between crude oil and the petroleum products
extracted from it.
Total oil sands production rose 20 percent to an average of
Cenovus were down 51 Canadian cents to C$32.53 by
midafternoon Toronto Stock Exchange. The shares have risen 10
percent over the past 12 months.
($1 = 1.0966 Canadian Dollars)
(Reporting by Sayantani Ghosh in Bangalore and Scott Haggett in
Calgary; Editing by Don Sebastian and Gunna Dickson)