April 27, 2016 / 10:22 AM / a year ago

Cenovus posts first-quarter loss, seeks regulatory clarity from Ottawa

CEO Brian Ferguson of Cenovus addresses shareholders during the company's annual general meeting in Calgary, Alberta, April 30, 2014.Todd Korol

CALGARY, Alberta (Reuters) - Cenovus Energy Inc (CVE.TO) said on Wednesday it needs more clarity from the Canadian government on pipeline and environmental issues before possibly reactivating oil sands projects that have been deferred because of the crude price rout.

Speaking on a conference call after Cenovus reported a first-quarter net loss and slump in cash flow, Chief Executive Brian Ferguson said he was looking for more than a price signal before giving the green light to deferred projects.

"The other piece of the equation here that I am watching carefully is for fiscal and regulatory clarity out of Ottawa. I expect to see that in the next few months," Ferguson said.

He said areas that needed clarification were discussions around the pipeline review process by the National Energy Board, the four working groups looking at climate policy and any potential changes around income tax rules.

Cenovus has postponed its Narrows Lake oil sands project as well as further expansions at its Foster Creek and Christina Lake plants since global crude prices started spiraling downward in mid-2014.

The Canadian oil industry is pressing hard for new crude export pipelines to help transport crude from landlocked Alberta to international markets. In January, however, the Liberal government introduced new interim rules for environmental reviews that imposed delays on TransCanada Corp's (TRP.TO) Energy East project and Kinder Morgan's (KMI.N) Trans Mountain expansion.

Cenovus said total cash flow in the most recent quarter slumped to C$26 million ($20.7 million), hurt primarily by weak prices and lower sales volumes.

Operating losses were 51 Canadian cents per share, steeper than analysts' average estimate of a loss of 40 Canadian cents, according to Thomson Reuters I/B/E/S.

Cenovus cut its 2016 capital spending budget by C$300 million to C$1.2 billion and reduced crude oil per unit operating costs by 14 percent to $11.08 a barrel versus the first quarter of 2015.

The Calgary-based company's net loss narrowed to C$118 million, or 14 Canadian cents per share, from a loss of C$668 million, or 86 Canadian cents per share, a year earlier, mainly due to foreign-exchange gains of C$403 million.

Crude production fell 9 percent to 197,551 barrels per day, with conventional oil making up most of the decline.

Oil sands output is expected to grow by around 50,000 bpd net to Cenovus as new phases of the Christina Lake and Foster Creek projects in northern Alberta start producing.

Additional reporting by Vishaka George in Bengaluru; Editing by Savio D'Souza and Matthew Lewis

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