On a November call in Calgary, the chief of Cenovus Energy stood before a country that is asking hard questions about who benefits when oil prices surge. His answer was that the industry returns tens of billions to the public purse each year, money that supports the hospitals, schools and cultural life that Canadians share. Yet the same moment carries a quieter question about whether private windfalls will be turned toward the long work of cleaning up the energy that produces them.
Cenovus CEO Defends Oil Sector's Record Profits, Citing $50 Billion in Government Contributions
Profit nearly tripled, but production slipped
Mark
Why did the CEO lead with the $50 billion figure?
Mimi
Because scrutiny is coming from two directions. Biden floated a windfall tax, and Canada's environment minister wants money going to clean energy rather than buybacks. The figure says the public is already getting a large share.
Luke
Worth noting that $50 billion is a projection from Peters & Co., an investment firm, cited by Pourbaix. It isn't an audited total, and the report doesn't break it down.
Mark
And the hospital comparison?
Mimi
He said it equals more than two-thirds of last year's hospital funding across Canada. It's a vivid frame, though it's his comparison.
Luke
Right, and the article doesn't verify it. Also, it's a measure of what's paid, not of whether it's enough.
Mark
What do Cenovus's own numbers show?
Mimi
Profit nearly tripled to $1.61 billion, net debt fell from $9.6 billion to $5.3 billion, and dividends rose with a variable payment on top of the base one. Production was actually slightly down.
Luke
So the profit came from prices, not volume. That's what the figures show, though the report doesn't spell out the cause for Cenovus specifically.
Mark
What about Pathways?
Mimi
Up to $16.5 billion before 2030, but no go-ahead yet. Pourbaix says they're waiting for policy assurances from governments.
Luke
That's the company's account of the holdup. What Ottawa and Alberta say about it isn't in this report, so the negotiation is still an unknown.
Der Puls
- Record oil revenues have landed in a public square already angry about fuel prices, and critics are demanding the industry share its gains.
- Cenovus's third-quarter profit nearly tripled to $1.61 billion as debt was slashed, while the company paid out a variable dividend on top of its base.
- Ottawa and Washington are both circling the question of windfall taxes and whether profits should flow to clean energy rather than shareholders.
- The Pathways Alliance's up-to-$16.5 billion carbon capture plan remains undecided, waiting on government assurances before it can move forward.
On a November call in Calgary, the chief of Cenovus Energy stood before a country that is asking hard questions about who benefits when oil prices surge. His answer was that the industry returns tens of billions to the public purse each year, money that supports the hospitals, schools and cultural life that Canadians share. Yet the same moment carries a quieter question about whether private windfalls will be turned toward the long work of cleaning up the energy that produces them.
On a Wednesday earnings call in Calgary, Cenovus Energy chief executive Alex Pourbaix turned part of his time toward the people criticizing his industry's profits. Citing an analysis from Peters & Co., he argued that Canada's oil and gas sector will hand roughly $50 billion in royalties and taxes to federal and provincial governments this year. He described that money as paying for health care, education, and arts and culture, and noted it equals more than two-thirds of the funding for all of Canada's hospitals last year.
The pressure behind his remarks was building fast. Days earlier, U.S. President Joe Biden had accused American oil companies of war profiteering and floated a windfall tax, while Canada's Environment Minister Steven Guilbeault urged the industry to put more money into clean energy rather than buybacks and dividends. Russia's invasion of Ukraine had shaken global energy markets, and Cenovus's third-quarter profit nearly tripled to $1.61 billion.
The company is sharing its gains with shareholders and paying down debt, cutting net debt from $9.6 billion to $5.3 billion this year. Output, however, did not rise with prices. Production slipped compared with a year earlier, a reminder that the boom follows nearly a decade of hard times.
The larger test lies with the Pathways Alliance, which includes Cenovus and is studying a major carbon capture network in northern Alberta. Pourbaix said the group is still working through details with Ottawa and Alberta, and will move to firmer investment decisions once governments provide the policy assurances it needs. Whether that commitment arrives remains the open question.
On a Wednesday earnings call in Calgary, Cenovus Energy chief executive Alex Pourbaix used part of his time to answer the people criticizing his industry's profits. He pointed to an analysis by the investment firm Peters & Co., which projects that Canada's oil and gas sector will hand roughly $50 billion in royalties and taxes to federal and provincial governments this year.
Pourbaix framed that number in terms of what it buys. It is money, he said, that pays for health care, education, arts and culture across the country. He offered a comparison as well: the sector's expected contribution this year equals more than two-thirds of the funding for all of Canada's hospitals last year.
The timing was not incidental. Only days earlier, U.S. President Joe Biden accused American oil and gas companies of "war profiteering" and raised the possibility of a windfall tax unless they use some of their record revenues to help bring down fuel prices for consumers. In Canada, Environment Minister Steven Guilbeault has said the industry should direct more of its money to clean energy projects rather than share buybacks and dividend increases.
The profits themselves are large. Russia's invasion of Ukraine destabilized global energy markets and sent commodity prices climbing. Cenovus reported that its third-quarter profit nearly tripled, to $1.61 billion, or 81 cents per diluted share, for the quarter ended Sept. 30. A year earlier it earned $551 million, or 27 cents per share. Revenue rose to $17.47 billion from $12.70 billion. Adjusted funds flow came to $1.49 per diluted share, up from $1.15.
Shareholders are sharing in it. Cenovus declared a variable dividend of 11.4 cents per share on top of its base dividend of 10.5 cents. The company has also cut its net debt from $9.6 billion to $5.3 billion since the start of the year. Production did not rise with prices: upstream output averaged about 777,900 barrels of oil equivalent per day, down from 804,800 a year earlier, and downstream throughput was 533,500 barrels per day, compared with 554,100.
The boom follows nearly a decade of depressed prices, layoffs and consolidation. The companies that came through those years are, in 2022, mostly using excess cash to pay down debt and reward shareholders rather than to build major projects or expand.
The decarbonization question centres on the Pathways Alliance, a group of oilsands companies that includes Cenovus. It is studying a large carbon capture and storage network in northern Alberta, and has said it could spend up to $16.5 billion on the project before 2030. It has not yet decided to proceed, and environmentalists have criticized the pace.
Pourbaix said Pathways is still working through details with Ottawa and the Alberta government. The group is ready to make more advanced investment decisions, he said, once governments give assurance that the necessary policy mechanisms and supports are in place. Whether that assurance arrives, and whether the $16.5 billion is committed, is the next thing to watch.
Bemerkenswerte Zitate
That's money that pays for health care, education, arts and culture and much more across this country.— Alex Pourbaix, Cenovus CEO
Pathways is ready for more advanced investment decisions once governments assure the necessary policy mechanisms and supports are in place.— Alex Pourbaix, paraphrased
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