Cenovus profit jumps 83% as MEG deal boosts output, targets more oil sands growth

By Khusbu Jena

May 6 (Reuters) - Cenovus Energy CVE.TO on Wednesday posted an 83% jump in first-quarter profit, driven by higher crude prices, strong refining margins and increased production following its acquisition of MEG Energy.

The company said it would raise its quarterly base dividend by 10% to 22 Canadian cents per share starting in the second quarter.

The Canadian oil and gas producer expects further output gains from its C$7.9 billion acquisition of MEG Energy, which added Christina Lake assets and boosted its position as one of the country's largest heavy oil producers.

CEO Jon McKenzie said Cenovus aims to drill 40 wells at Christina Lake this year, and expects production from the oil sands asset to increase through the rest of the year.

The company also plans to start up four additional well pads at Narrows Lake in 2026, with output expected to reach 80,000 barrels per day.

At the West White Rose offshore project, commissioning and testing are complete and drilling has begun, with first oil expected in the third quarter of 2026.

Integrated oil companies such as Cenovus are gaining from a global fuel market disrupted by the Iran war, which has tightened supply, pushed up oil prices and boosted earnings from both production and refining.

Upstream production rose 19% to a record 972,100 barrels of oil equivalent per day (boepd) in the first quarter, while total downstream operating margin stood at C$734 million ($539.94 million), compared with last year's loss of C$237 million.

Refinery utilization rates stood at 97%.

Separately, Cenovus said it would sell its Canadian commercial fuels business, including travel centres and retail sites, for about C$275 million. The deal is expected to close in the second half of 2026.

The Calgary, Alberta-based company's net earnings rose to C$1.57 billion, or C$0.83 per share, during the quarter, from C$859 million, or C$0.47 per share, a year earlier.

However, Cenovus' shares fell more than 5%, tracking a $7.63-per-barrel fall in oil prices. O/R

($1 = 1.3594 Canadian dollars)