Cenovus plans to increase rail crude shipments

Canadian oil producer Cenovus Energy Inc. plans to further expand its crude oil rail transportation agreements on Canada's two major railways, its chief executive said Wednesday.

Last month, Cenovus signed a three-year agreement with Canadian National and Canadian Pacific Railway for the transportation of approximately 100,000 barrels of crude oil per day (b / d) from northern Alberta to Gulf Coast, beginning in the fourth quarter. The agreements come as the cuts to Canadian oil relative to US crude hit record highs this month as production rises against pipeline constraints.

Cenovus could extend these agreements by an additional 20,000 barrels per day for a total volume of 120,000 barrels per day and the equivalent of two unit trains, said CEO Alex Pourbaix, at a press conference. Reuters Global Commodities summit interview. Block trains only carry one product.

"We are quite convinced that if it makes sense to move to 120, we will be able to have the arrangements in place to achieve this," said Pourbaix. "We'll wait a bit. I want to see how the rest of the rail (movement) gets stronger. "

The Calgary, Alberta-based company, which operates a rail loading terminal in northern Alberta, currently transports less than 20,000 b / d of its oil by rail, with the entire Canadian industry shipping approximately 250,000, a record, said Pourbaix. Total shipments are expected to reach 300,000 b / d by the end of the year, Cenovus said earlier during a conference call.

Cenovus said earlier Wednesday that it was limiting production due to sharp cuts and expected the price of domestic heavy crude oil to rise by mid-2019, as rising rail volumes would dampen prices. throttling bottlenecks.

The company did not specify the volume of production it was restricting, but indicated that it had slowed production at its Foster Creek and Christina Lake sites. Pourbaix said that the entire sector should do its part to reduce excess supply.

"We will not take the industry behind us. We will do it as long as we can justify creating value for our shareholders by deferring that production, "Pourbaix told badysts.

Pourbaix said the producers had made no effort to coordinate the cuts.

Cenovus faced investor anger following its contract to purchase some of ConocoPhillips' oil sands badets last year and incurred a huge debt. Since then, the company has taken steps to turn its business around by laying off and selling badets.

Rival Husky Energy Inc. has made a hostile bid for MEG Energy Corp, while other Canadian producers are increasing their production. Pourbaix said he was not afraid of losing market share and that he was focusing on debt reduction and, later, on growth via his own projects.

Alberta Premier Rachel Notley recently suggested that Ottawa purchase rail cars or locomotives to reduce the backlog. Pourbaix said that he supported the government's help, but that bottlenecks require "quick fix" but that they will mitigate at the end of the day. ######################################################################################## 39 next year.

Total production increased 4% to 495,592 barrels of oil equivalent per day in the third quarter.

The company's net loss was $ 242 million compared to a profit of $ 275 million a year ago.

On an adjusted basis, Cenovus lost 3 cents per share. Analysts on average expected earnings per share of 21 cents Canadian, according to Refinitiv.

The company's shares rose 0.81% to $ 11.18 in Toronto.