EPS of 39c beat estimates of 37c. Revenue of $16.2B was nicely ahead of estimates. Cenovus reported a strong operational quarter, but weaker margins in Upstream and Downstream will likely lower free funds flow in 2024. Upstream production reached its second-highest level in history during 4Q, with the Oil Sands segment performing well ahead of the 2023 average. The return of the Terra Nova field added to Upstream output and should help reduce 2024 cash spending while boosting volumes. Downstream also performed strongly, with its operated refineries fully available for the second straight quarter after rebuilding the Superior refinery. The start of operations at the TransMountain Expansion pipeline, expected in 2Q, might not have a significant effect on Cenovus' existing output but could allow for further growth in oil sands. Overall, we remain comfortable here.
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