Cenovus set to surpass million-barrel per day production as it digests MEG purchase

Cenovus Energy Inc. expects production to come in higher and costs to track lower than its earlier 2026 forecast.

The Calgary-based oil giant released updated guidance on Wednesday along with its second-quarter results, which included a threefold profit surge.

Cenovus is expecting total upstream production to now range from 970,000 to 1.01 million barrels per day, an increase of 25,000 barrels per day from the midpoint of its earlier range.

Average monthly production for July is set to surpass the million-barrel-per-day mark, chief executive Jon McKenzie told analysts on a conference call.

“This will be the first month the company has achieved this milestone, which is a testament to the quality of our people and assets, as well as our resilient culture,” he said.

Meanwhile, operating costs in the oilsands are expected to drop to US$10.75 to $11.75 a barrel, a one-dollar decrease from both figures in the earlier range.

McKenzie said most of the production bump has been from its largest asset, the steam-driven Christina Lake project near Colklin, Alta, located south of Fort McMurray.

Christina Lake has been averaging 400,000 barrels a day for the month of July, he said.

The company’s presence in the region grew substantially since its acquisition last year of MEG Energy, which had operations directly next door to Cenovus’s Christina Lake assets.

The deal closed in November of last year after a heated bidding war with Strathcona Resources Ltd.

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“We have delivered on all the upfront commercial and corporate synergies and remain on track to increase production to 150,000 barrels a day by 2028,” McKenzie said.

Cenovus shares were about four per cent higher in Wednesday trading on the Toronto Stock Exchange.

Cenovus is one of the five oilsands majors in the Oil Sands Alliance, which has proposed to build the multibillion-dollar Pathways carbon transport and storage project.

2:02 Agreement reached on Pathways carbon capture project

Under a sweeping federal-provincial energy accord signed last year, the advancement of Pathways is a condition for Ottawa approving the new West Coast oilsands pipeline proposed by the Alberta government.

The Oil Sands Alliance, Ottawa and Alberta signed a secondary memorandum of understanding earlier this month on how to move Pathways forward while working to increase Canada’s bitumen production. Binding agreements with each alliance member are set to be signed this fall.

McKenzie has been one of the more outspoken oilpatch critics of federal environmental policies that, he argues, hurt the industry’s competitiveness.

On Cenovus’s first-quarter conference call in May, he dedicated much of his prepared remarks to lamenting a national dialogue around energy that has been “myopically focused on the climate agenda” and stymied investment.

McKenzie struck a more optimistic, if somewhat guarded, tone on Wednesday’s call.

“While the MOU was only a first step, the agreement represents meaningful progress toward creating a competitive investment environment for Canada’s vast oilsands resource base,” he said.

“Although the MOU still provides provisions for an uncompetitive carbon tax that uniquely burdens Canadian industry, it creates a framework for governments and industry to work together on production growth, emissions reduction and expanded market access.”

2:38 Federal and Alberta governments sign pipeline Memorandum of Understanding

• Federal and Alberta governments sign pipeline Memorandum of Understanding
• Alberta Premier Smith feels confident after meeting Carney, signals progress on pipeline talks
• ‘I hope we can get to the finish line’: Smith nudges Carney for progress on Canada-Alberta MOU
• ‘There’s no action’: Alberta-Ottawa MOU delays spark concern from energy industry
• AFN calls for withdrawal of Canada-Alberta pipeline agreement
• Political Panel: Carney and Smith sign pipeline MOU
• Carney and Smith sign pipeline MOU

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Earlier Wednesday, Cenovus reported a second-quarter profit of $2.87 billion, up from $851 million a year ago.

That amounted to $1.53 per diluted share, up from 45 cents per diluted share in the same quarter last year. Analysts had been on average expecting earnings of $1.62 per share, according to LSEG Data & Analytics.

Revenue totalled $17.4 billion, up from $12.3 billion a year earlier.

Total upstream production was 970,400 barrels of oil equivalent per day, up from 765,900 in the second quarter of 2025.

Downstream crude throughput was 451,500 barrels per day, down from 665,800 a year earlier.