Cenovus Energy Inc. (NYSE:CVE) Q4 2022 Earnings Call Transcript

Menno Hulshof: Alex. And maybe I’ll just move on to Asia-Pac. Could we get an update on regional pricing dynamics given the regional — sorry, the recent volatility? And on the contracting side of things, and with the understanding that your largely fixed price across your Asia-Pac portfolio, is there anything that we should be aware of in terms of ongoing contracting activity or price resets? I think the answer is nothing material, but maybe you can confirm that.

Joseph Zieglgansberger: Sure, Menno, it’s Drew. So you’re correct. Like on the contracting side around price, it’s fairly set from a range bound standpoint. That will still play out for a number of years. Interesting load, you’re kind of getting to the point that I think we are seeing that just before Christmas, even in December, actually, we started to see buyers and the demand really start to increase. And so we’ve actually been over kind of selling even on our contract volumes since December. And that’s carried through here into the first quarter. And it is really around what you’re alluding to here is we’re seeing demand really pick up over there. So we’re in a really nice circumstance at the moment actually, that we are in conversations about potentially some more supplemental agreements like we’ve had in the past.

So those conversations are happening literally as we speak. But in a true day-to-day, week-to-week reality, we’ve been actually producing and selling above contract volume. But from the pricing perspective, it is price bound as per the longer-term contracts.

Jonathan McKenzie: Menno, it’s John. We actually gave you a fairly good snapshot of the netbacks that we get from our Asia Pacific business and some of the supplementary information that we send out. So to Drew’s point, the gas in Asia and Indonesia is relatively fixed, but we do float on the NGL side. So you will see some variance from quarter-to-quarter depending on how much of the NGLs we sell and what price we get for them, but they’re usually kind of a Brent plus basis for the liquids.

Joseph Zieglgansberger: Yes. And just to finish with that, Menno, the netbacks are north of $70 per BOE equivalent.

Operator: . We will take our next question from John Royall with JPMorgan.

John Royall: Congratulations to John and on the new roles. So just if you could maybe speak to the overall impact of the Keystone outage on upstream. I know it sounds like you’ve built some inventories. Is it necessary? Or is there a plan to draw those inventories back down from here? And I think reports we’ve seen that only spot volumes are currently impacted on Keystone. So maybe you could just confirm if you’re back shipping on that pipe to the levels you were prior to the spill?

Keith Chiasson: John, it’s Keith. Yes, obviously, the impact of Keystone through the month of December impacted both our upstream and our downstream assets. We did choose to — if there was an apportionment on the mainline driven by some of that as well. So we had a few decisions to take in the December period. And a couple of those were to ramp up our rail program. So we’re able to ship on 9 unit trains through the December, January time period. And now we’re ramping that program back down. Keystone’s back flowing. So egress out of Canada, we’re seeing the differential come back in because of sufficient egress out of Canada. So I would say, all of our downstream assets are being fed and the inventory that we built, we will sell off into the market at higher values than if we had to try to sell it in a distressed market in December.