Company News

CORRECTED-UPDATE 2-Oil producer Cenovus cuts full-year spending forecast, raises dividend

(Corrects dividend in last paragraph to 6.25 Canadian cents, from 62.5 Canadian cents. The error had also appeared in a previous version of the story)

Oct 2 (Reuters) - Canadian oil and gas producer Cenovus Energy Inc on Wednesday lowered its full-year spending target and raised its quarterly dividend, as it looks to placate shareholders seeking higher returns.

The company revised its 2019 capital budget to between C$1.1 billion ($830.25 million) and C$1.2 billion, about C$150 million lower than the midpoint of its previous forecast of between C$1.2 billion and C$1.4 billion.

Investors have generally punished companies that increased spending on drilling instead of returning cash to shareholders. They have called for capital discipline, cleaner balance sheets and better management of cash flow as oil prices remain volatile due to the ongoing global trade uncertainties.

Cenovus, whose 2019 capital expenditure forecast was already below last year’s spending, said its five-year plan will focus on growing its cumulative free funds flow to C$11 billion, while increasing production by 2% to 3% yearly to reach 550,000 barrels of oil equivalent (BOE) per day by the end of 2024.

The oil sands producer slightly lowered its total upstream production guidance for 2019 to between 440,000 and 464,000 BOE per day, from the 445,000 to 475,000 BOE per day forecast earlier.

Cenovus raised its quarterly dividend by 25% to 6.25 Canadian cents per share, and said it has the capacity to increase it further at a rate of 5% to 10% annually.

$1 = 1.3249 Canadian dollars Reporting by Shariq Khan in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila