CALGARY
Cenovus Energy Inc. says it will not change its output plans in response to this fall's unexpectedly wide discount on Western Canadian crude oil, which the company expects to be temporary.
Chief executive Jon McKenzie acknowledged the recent weakness in Canadian heavy crude prices, which began to slump relative to the U.S. benchmark in October.
As of Monday, Western Canada Select was trading more than US$30 a barrel below West Texas Intermediate, its widest spread since 2018.
"We will continue to execute our long-term plans, and continue to execute on our strategy and operate well through this," McKenzie said.
He said the current weak pricing is different from the 2018 situation, in that it is not being driven by a lack of Canadian pipeline capacity but by global factors.
In particular, high freight rates have sharply cut export demand for Canadian barrels being re-exported from the U.S. Gulf Coast.
While the company does not know when the situation will normalize, McKenzie said he expects the wide differentials to be temporary and added the company is not changing its production outlook as a result.
The Calgary-based company reported an increase in third-quarter profit on Wednesday, supported by record oil production and improved refining margins.
One of Canada's largest oil sands producers, Cenovus pumped a record 1.024 million barrels of oil equivalent per day during the quarter, up from 832,900 boepd a year earlier.
The company surpassed the 1-million-boepd mark for the first time, as production hit quarterly records at its Christina Lake, Foster Creek and Sunrise oil sands projects.
The company's adjusted refining margin rose to $55.52 per barrel in the third quarter, from $29.83 in the preceding three months.
Cenovus' net income rose to $3.36 billion, or $1.83 per share, in the three months ended Sept. 30, from $1.29 billion, or 72 cents per share, a year earlier.
During the third quarter, Cenovus processed 437,200 barrels per day of crude in its refineries, down from 710,700 bpd a year earlier.
It said a planned turnaround at its Lima refinery weighed on U.S. refining throughput.
Cenovus' overall crude unit utilization rate stood at 92 per cent, while U.S. refining adjusted market capture was 88 per cent.
The company has been expanding its oil sands business through acquisitions.
In October, it agreed to acquire Athabasca Oil Corp. in a $5.7 billion cash-and-stock deal, which would add about 45,000 boepd to its thermal oil sands production.
The transaction, expected to close in December, follows Cenovus' purchase of MEG Energy last year.
In 2018, the wide discount on Alberta crude prompted the province's government to order its biggest producers to curtail production in an effort to get the price blowout under control.
This story was written by the e2gold.ca newsroom from reporting by The Globe and Mail and Pipeline and Gas Journal. Quotes are checked word for word against that reporting.