Oil producer Cenovus raises 2020 budget as Alberta curtailments eased

FILE PHOTO: Oil rig floorhands from Akita Drilling work on an oil rig 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

(Reuters) - Canadian oil producer Cenovus Energy Inc said on Tuesday it would spend nearly a quarter more in 2020, after the province of Alberta lifted some curtailments on new oil wells last month.

The company said it plans to invest between C$1.3 billion ($977.37 million) and C$1.5 billion, nearly 22% higher compared to the mid-point of 2019 forecast.

“This budget positions us well to generate adjusted funds flow of more than C$3 billion in 2020 under our price assumptions,” said Chief Executive Office Alex Pourbaix.

Higher spending is not a popular choice for shareholders, who prefer companies rather return cash to them. Investors want capital discipline, cleaner balance sheets and better management of cash flow from companies as oil prices remain volatile amid global trade tensions.

The Calgary-based company said it expects total production for 2020 to be between 472,000 barrels of oil equivalent per day (boepd) and 496,000 boepd, about 7% higher than its 2019 production forecast.

Alberta, Canada’s main oil-producing province, in January ordered curtailments on oil production to deal with pipeline bottlenecks that had led to a glut in crude storage and record price discounts.

Later in October, it eased the curtailment rules allowing companies to produce additional oil, provided they move it by rail.

Reporting by Arunima Kumar in Bengaluru; Editing by Shinjini Ganguli