Earnings & Outlook Summary

Q4 2024 Earnings Date: February 20, 2025 (Before Market Open)

Estimated Financials:

• EPS: $0.32 (YoY: +10.3%, QoQ: +3.2%)
• Revenue: $11.08B (YoY: -15.6%, QoQ: -22.2%)

Key Financial Metrics from Q3 2024:

• Operating Margin: $2.7B (Upstream and downstream combined)
• Cash Flow: $2B adjusted funds flow, $600M free cash flow
• Net Debt: Achieved $4B target
• Production: 771,000 BOE/d (Christina Lake exceeded by 15,000–20,000 BOE/d)

2025 Capital Budget & Growth Strategy

Planned CapEx: $4.6B-$5B

• Sustaining Capital: $3.2B (Maintain base production, operational reliability)
• Growth Projects: $1.4B-$1.8B
  • Narrows Lake: First oil mid-2025, adding 20,000–30,000 BOE/d
  • West White Rose: First oil 2026, peak production 45,000 BOE/d by 2028
  • Foster Creek Optimization: Improving oil sands output efficiency

Guidance for 2025:

• Production Target: 805,000 – 845,000 BOE/d (+4% YoY)
• Crude Unit Utilization: 90%-95%
• Oil Sands OpEx: $8.50-$9.50 per barrel (Flat YoY)
• U.S. Refining OpEx: $10-$12 per barrel (-7% YoY)

Key Strengths & Catalysts

• Upstream Efficiency: Christina Lake and Foster Creek projects delivering higher-than-expected production.
• Improved Market Access: TMX pipeline expansion reducing WCS price volatility.
• Cost Management: Refining cost improvements, steady OpEx, and CapEx discipline.

Potential Risks & Weaknesses

• Revenue Decline: YoY and QoQ declines could indicate pricing and refining pressures.
• Crude Price Sensitivity: Needs WTI >$50 to sustain dividends and CapEx.
• Refining Reliability: Past outages (e.g., Lima refinery) impacted margins, further disruptions pose a risk.

Technical Analysis & Stock Reaction Expectations

Key Support Levels:

• $14.70 – $14.90 (Recent buying zone)
• $14.35 (Critical Fibonacci retracement support)
• $13.80 (Next downside level if weakness continues)

Key Resistance Levels:

• $15.50 (Struggling to break, near-term ceiling)
• $16.00 (Major breakout level from past highs)

Technical Indicators:

• RSI: 55.2 (Neutral, no overbought/oversold signals)
• ADX: 15.4 (Weak momentum, suggesting sideways trading)
• Volume Trend: Declining, indicating lack of strong buying pressure above $15.50

Stock Reaction Scenarios Post-Earnings

1. Bullish Case (Breaks above $15.50)
   • EPS beats expectations, strong guidance for refining operations.
   • WTI stabilizes or trends above $75.
   • Positive updates on project execution (Narrows Lake, West White Rose).
2. Neutral Case (Trades between $14.70 – $15.50)
   • EPS in line with estimates, revenue concerns persist.
   • Mixed guidance—cost control offsets revenue weakness.
3. Bearish Case (Drops below $14.70, risks $14.35 breakdown)
   • Revenue or EPS miss, weaker guidance on refining reliability.
   • Crude pricing concerns impact investor sentiment.

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Analyst Opinion – Will Cenovus Beat Earnings?

Cenovus has a good chance of meeting or slightly exceeding EPS expectations but could miss on revenue due to weak refining margins and lower crude price realizations.

• Why they could beat EPS:
  • Cost controls remain tight, and refining operations have improved from prior outages.
  • Higher-than-expected production in Q3 (especially at Christina Lake) suggests upstream margins were strong.
  • Free cash flow remains positive, supporting capital discipline.
• Why revenue may disappoint:
  • Revenue estimates are down significantly from last year (-15.6% YoY), indicating weaker price realizations.
  • Refining reliability remains a wildcard, and past issues could continue to weigh on margins.

Given these factors, EPS should meet or slightly beat estimates, but revenue may remain weak. If the company provides strong guidance on refining improvements and capital efficiency, the stock could see a modest upside move. However, a revenue miss combined with cautious guidance could limit gains and keep the stock range-bound.

For traders, $15.50 remains the key breakout level, while $14.35 is the downside risk level to watch.