Cenovus signs rail deals to transport oil to U.S. Gulf Coast
September 26 2018 - 5:07PM
Cenovus Energy Inc. (TSX: CVE) (NYSE: CVE) has signed three-year
deals with major rail companies to transport approximately 100,000
barrels per day (bbls/d) of heavy crude oil from northern Alberta
to various destinations on the U.S. Gulf Coast. The agreements
involve moving oil with CN from Cenovus's Bruderheim Energy
Terminal starting in the fourth quarter of 2018, and with CP
through USD Partners' terminal in Hardisty, Alberta starting in the
second quarter of next year, both ramping up through 2019.
“Moving crude by rail is part of a portfolio approach we take to
transporting our product to market,” said Alex Pourbaix, Cenovus
President & Chief Executive Officer. “Our rail strategy
provides a means of mitigating the price impact of pipeline
congestion. While we remain confident new pipeline capacity will be
constructed, these rail agreements will help get our oil to
higher-price markets.”
The plan involves not only the freight and loading components
but also rail car leasing, offloading logistics, marketing and
other arrangements. The specifications of the cars Cenovus is
leasing meet or exceed all applicable current and announced
regulatory requirements. The company is expecting all-in costs to
transport the oil from Alberta to the Gulf Coast in the mid to high
teens (U.S. dollars), consistent with prior estimates. Exact
commercial details of the agreements are confidential.
Cenovus continues discussions about expanding the
oil-by-rail agreements to move additional volumes if the terms are
favourable.
ADVISORY This news release contains certain
forward-looking statements and forward-looking information
(collectively referred to as “forward-looking information”) within
the meaning of applicable securities legislation, including the
United States Private Securities Litigation Reform Act of 1995,
about Cenovus's current expectations, estimates and projections
about the future, based on certain assumptions made in light of
Cenovus's experience and perception of historical trends. Although
Cenovus believes that the expectations represented by such
forward-looking information are reasonable, there can be no
assurance that such expectations will prove to be correct.
Forward-looking information in this document is identified by
words such as “anticipate”, “confident”, “estimate”, “expect”,
“plan”, “strategy”, “will”, or similar expressions and includes
suggestions of future outcomes, including statements about: the
company’s planned timeline to start moving oil under the
agreements, including ramp-up; the company’s rail strategy,
including as a means of mitigating the price of pipeline
congestion; the company’s confidence that new pipeline
capacity will be constructed; the company’s expectation that the
rail agreements will help get its oil to higher-price markets,
including the U.S. Gulf Coast; and expected all-in costs to
transport oil from Alberta to the Gulf Coast.
Developing forward-looking information involves reliance on a
number of assumptions and consideration of certain risks and
uncertainties, some of which are specific to Cenovus and others
that apply to the industry generally. The factors or assumptions on
which the forward-looking information is based include: the
company’s ability to move volumes of oil under rail agreements,
including on the planned timeline and in accordance with expected
all-in costs; the effectiveness of Cenovus’s rail strategy to
mitigate the price impact of pipeline congestion; availability and
the company’s ability to make use of the rail transportation
capacity; successful construction of new pipeline capacity,
including on a reasonable timeline; current rail tariffs, which
remain subject to change; potential significant changes in
applicable rail tariffs from time to time; accuracy of the expected
all-in transportation costs from Alberta to the Gulf Coast; the
company’s ability to realize the mitigation impacts of its rail
strategy, including the company’s ability to realize higher prices
for its oil in the near term and in the future; the company’s
ability to secure all necessary freight, rail car leasing,
offloading, marketing and other related arrangements; compliance of
the leased rail cars with all applicable current and announced
regulatory requirements; Brent price of US$55.00/bbl, WTI price of
US$52.00/bbl; WCS of US$37.00/bbl; NYMEX natural gas price of
US$3.00/MMBtu; AECO natural gas price of $2.20/GJ; Chicago 3-2-1
crack spread of US$15.00/bbl; exchange rate of $0.78 US$/C$ and
other assumptions identified in Cenovus’s 2018 guidance (dated
December 13, 2017) (available at cenovus.com).
Additional information about risks, assumptions, uncertainties
and other factors that could influence Cenovus’s actual results is
provided in Cenovus’s Management’s Discussion and Analysis
(MD&A) for the period ended June 30, 2018 as well as its
MD&A, Annual Information Form and Form 40-F for the year ended
December 31, 2017 (all available on SEDAR at sedar.com, on EDGAR
at sec.gov and Cenovus's website at cenovus.com). Readers
are cautioned that the foregoing lists are not exhaustive and are
made as at the date hereof. Events or circumstances could cause
Cenovus's actual results to differ materially from those estimated,
projected, expressed, or implied by the forward-looking
information. Except as required by applicable securities laws,
Cenovus does not undertake any obligation to publicly update
forward-looking statements.
Cenovus Energy Inc.Cenovus Energy Inc. is a
Canadian integrated oil and natural gas company. It is committed to
maximizing value by responsibly developing its assets in a safe,
innovative and efficient way. Operations include oil sands projects
in northern Alberta, which use specialized methods to drill and
pump the oil to the surface, and established natural gas and oil
production in Alberta and British Columbia. The company also has
50% ownership in two U.S. refineries. Cenovus shares trade under
the symbol CVE, and are listed on the Toronto and New York stock
exchanges. For more information, visit cenovus.com.
Find Cenovus on Facebook, Twitter, LinkedIn, YouTube and
Instagram.
CENOVUS
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A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/caec2f92-c970-4d38-ad9c-3968e12fe034
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