On a quiet earnings call, the head of Cenovus Energy turned from quarterly numbers to a question that has grown heavier as the world's energy markets have been jolted by war: what does an oil company owe the society it draws from? Record profits, flowing from a conflict far away, have put the industry in the awkward position of being thanked for its tax payments while being asked to spend its windfall on the future. The answer is still being negotiated between companies, governments, and a public that wants both affordable fuel and a cleaner climate.
Cenovus CEO Defends Oil Sector's Record Profits, Citing $50 Billion in Taxes and Royalties
Profit nearly tripled, and the carbon capture decision is still waiting
Mark
Why did the CEO lead with the $50 billion figure?
Mimi
Because the pressure is coming from two sides. Biden is floating a windfall tax, and Canada's environment minister wants money going to clean energy instead of buybacks. The tax and royalty number answers both by saying the public is already getting a share.
Mark
And the hospitals comparison?
Mimi
He said the contribution equals more than two-thirds of last year's funding for all Canadian hospitals. It turns a large abstract number into something people recognize.
Luke
But note where the $50 billion comes from. It's a projection from Peters & Co., an investment firm, not a government tally. It's also a forecast for this year, and the hospital comparison is Pourbaix's own framing.
Mark
What do the company's own numbers show?
Mimi
Profit of $1.61 billion against $551 million a year ago, and net debt down from $9.6 billion to $5.3 billion. Dividends include a variable payment of 11.4 cents on top of the 10.5 cent base.
Luke
Production fell too, from 804,800 to 777,900 barrels of oil equivalent per day. So the surge is price-driven, not volume-driven.
Mark
What about the carbon capture project?
Mimi
Pathways says it could spend up to $16.5 billion before 2030, but no decision has been made. Pourbaix says it depends on governments providing policy supports.
Luke
"Could spend" is not a commitment, and the article doesn't say what supports are being negotiated or when a decision might come. That's still unknown.
El Pulso
- Record third-quarter profits nearly tripled at Cenovus, landing squarely in the middle of a public argument over who should benefit from the energy shock.
- The U.S. president's talk of windfall taxes and Canada's environment minister's call for clean energy investment have turned boardroom earnings into a political flashpoint.
- Cenovus is steering the conversation toward roughly $50 billion in expected royalties and taxes, while shareholders receive dividends and debt is cut sharply.
- Production has actually slipped, and the $16.5 billion Pathways carbon capture project remains uncommitted, waiting on government policy assurances before any final investment decision.
On a quiet earnings call, the head of Cenovus Energy turned from quarterly numbers to a question that has grown heavier as the world's energy markets have been jolted by war: what does an oil company owe the society it draws from? Record profits, flowing from a conflict far away, have put the industry in the awkward position of being thanked for its tax payments while being asked to spend its windfall on the future. The answer is still being negotiated between companies, governments, and a public that wants both affordable fuel and a cleaner climate.
On a Wednesday earnings call, Cenovus Energy chief executive Alex Pourbaix spent part of his time answering critics who say the oil and gas industry owes the country more. He pointed to an analysis projecting that the sector will pay roughly $50 billion in royalties and taxes to federal and provincial governments this year, money he said funds health care, education, and the arts. He noted that this equals more than two-thirds of what Canada spent on all its hospitals last year.
The timing was sharp. 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. The pressure comes as Russia's invasion of Ukraine has sent energy prices soaring.
Cenovus's third-quarter profit nearly tripled to $1.61 billion, and revenue climbed to $17.47 billion. Shareholders are sharing the gains through a variable dividend, and net debt has fallen from $9.6 billion to $5.3 billion this year, a pattern common across an industry that spent nearly a decade recovering from depressed prices. Production, however, slipped slightly.
The central test is the Pathways Alliance, a group of oilsands companies exploring a large carbon capture network in northern Alberta. It could cost up to $16.5 billion before 2030, but no commitment has been made. Pourbaix said talks with Ottawa and Alberta continue, and the companies will move toward final investment once governments provide the policy supports they need. Whether those assurances arrive will decide if that figure becomes a real commitment.
On a Wednesday conference call about third-quarter earnings, Cenovus Energy chief executive Alex Pourbaix spent part of his time on a different subject: what critics say the oil and gas industry owes the country. He pointed to a recent analysis by the investment firm Peters & Co., which projects that the sector will hand roughly $50 billion in royalties and taxes to Canadian federal and provincial governments this year.
Pourbaix framed the figure in terms of public services. The money, he said, pays for health care, education, arts and culture and much more. He added that the sector's expected contribution this year equals more than two-thirds of what was spent on all of Canada's hospitals last year.
The timing was pointed. Days earlier, U.S. President Joe Biden had 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 argued that the industry should direct more money to clean energy projects rather than share buybacks and dividend increases.
The profits behind the argument are large. Russia's invasion of Ukraine destabilized global energy markets and sent commodity prices soaring, and Cenovus's results show the effect. Its third-quarter profit nearly tripled, reaching $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, compared with $1.15 in the third quarter of 2021.
Shareholders are sharing in the gains. 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. That pattern is common across the industry: after nearly a decade of depressed prices, layoffs and consolidation, the companies that survived are using excess cash to pay down debt and reward investors rather than to fund major capital projects or expansion.
Production actually slipped. Cenovus's upstream output averaged about 777,900 barrels of oil equivalent per day in the quarter, down from 804,800 a year earlier. Downstream throughput averaged 533,500 barrels per day, compared with 554,100 in the same period of 2021.
The decarbonization debate centers on the Pathways Alliance, a consortium of oilsands companies that includes Cenovus. It is exploring a large carbon capture and storage network in northern Alberta. The group has said it could spend up to $16.5 billion on the project before 2030, but it has not committed to going ahead, and environmentalists have criticized the pace.
Pourbaix said the talks are continuing with both Ottawa and the Alberta government. The companies, he said, are ready to move toward more advanced investment decisions once governments assure them that the necessary policy mechanisms and supports are in place. Whether those assurances arrive will determine if the $16.5 billion figure becomes a real commitment.
Citas Notables
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 to make more advanced investment decisions once governments assure that the necessary policy mechanisms and supports are in place.— Alex Pourbaix, Cenovus CEO (paraphrased)
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