Canada's Cenovus says would consider refinery acquisitions

Thu Oct 27, 2016 2:02pm EDT
 
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By Nia Williams

CALGARY, Alberta (Reuters) - Canadian oil and gas producer Cenovus Energy Inc (CVE.TO: Quote) said on Thursday it would consider refinery acquisitions in areas including the U.S. Gulf coast region provided the opportunity offered good value and was easily accessible for Canadian crude.

Chief Executive Brian Ferguson, speaking on a third-quarter earnings call, said integrating Cenovus's oil production in western Canada with its downstream business was core.

"It's very consistent with strategy and really revolves around how do we improve the margin on every barrel that we can produce," he said. "There would be a whole laundry list of items that would have to be accomplished starting with very good value."

The company has a 50 percent share in two U.S. refineries operated by Phillips 66 with a combined gross capacity of 460,000 barrels per day, and recently completed a de-bottlenecking project at the Wood River, Illinois plant that added 18,000 barrels per day of capacity.

Cenovus is also updating cost estimates for Phase G of its Christina Lake thermal plant in northern Alberta, which was deferred after crude prices slumped in 2014. It was one of nearly 20 oil sands projects put on hold by producers.

"We have been clear about our capital priorities within the oil sands, and that Christina Lake phase G will be the first project in the oil sands to resume construction," Ferguson said, adding that the company would give more details in December.

Ferguson said the 2017 capital budget was likely to be focused on capital discipline.

Cenovus trimmed its 2016 capital spending budget to C$1.0 billion - C$1.1 billion, from the C$1.1 billion - C$1.2 billion previously forecast, and said it cut operating costs per barrel by 14 percent versus the year-ago period.   Continued...

 
Rows of steam generators line a road at the Cenovus Energy Christina Lake Steam-Assisted Gravity Drainage (SAGD) project 120 km (74 miles) south of Fort McMurray, Alberta, August 15, 2013.  REUTERS/Todd Korol