Cenovus Energy Inc (CVE)

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Cenovus Energy, Inc. (CVE)

2013 Budget Conference Call

December 12, 2012; 11:00 a.m. ET

Executives

Brian Ferguson - President & Chief Executive Officer

Ivor Ruste - Executive Vice President & Chief Financial Officer

John Brannan - Executive Vice President & Chief Operating Officer

Harbir Chhina - Executive Vice President - Oil Sands

Susan Grey - Director, Investor Relations

Analysts

George Toriola - UBS

Greg Pardy - RBC Capital Markets

Mike Dunn - FirstEnergy

Mark Polak - Scotiabank

David McColl - Morningstar

Presentation

Operator

Good day ladies and gentlemen and thank you for standing by. Welcome to Cenovus Energy’s 2013 Budget Conference Call.

As a reminder, today’s call is being recorded. At this time all participants are in a listen-only mode. Following the presentation we will conduct a question-and-answer session. (Operator Instructions). Please be advised that this conference call may not be recorded or rebroadcast without the expect consent of Cenovus Energy.

I would now like to turn the conference over to Susan Grey; Director, Investor Relations. Please go ahead Ms. Gray.

Susan Grey

Thank you operator and welcome to our discussion of Cenovus’s 2013 budget. In addition to this morning’s news release, we have posted guidance and a presentation package to our website. Throughout today’s conference call we will reference the midpoint of our guidance estimates unless otherwise noted. All figures are before royalties and in Canadian dollars.

First, I would like to refer you to the advisory on forward-looking information in today’s news release and associated documents. In particular, I draw your attention to the risk factors and assumptions outlining advisory and discussed further in our Annual Information form and our Quarterly Report. We also provide details on oil and gas information and non-GAAP disclosures. I encourage you to read both of these disclosures.

Our call today will begin with Brian Ferguson, President and Chief Executive Officer, discussing our oil growth strategy and our 2013 plan. Ivor Ruste, Executive Vice President and Chief Financial Officer, will then provide the details of our 2013 budget and our financial strategy. John Brannan, Executive Vice President and Chief Operating Officer, will discuss our operational expectations for 2013 and Harbir Chhina, Executive Vice President, Oil Sands will provide an emerging play and technology updates. Following some closing comments from Brian, our executive team will be available for questions. Please go ahead Brian.

Brian Ferguson

Thanks Susan. Good morning. Cenovus recently celebrated its third birthday as an independent company. We’ve accomplished a lot in our first three years and remain focused on the objectives that we first laid out in our 10-year plan back in June of 2010.

In that plan we identified opportunities to grow our oil production to 500,000 barrels per day net to Cenovus by the end of 2021. We remain committed to this oil growth strategy. Our strategy is anchored by the development of our vast oil sands resource. To be successful we must have financial strength. Our balance sheet remains strong and our conventional oil and gas assets provide great short and medium term cash flow.

Our refineries reduced the volatility of our overall cash flow and we are broadening our integration through transportation alternatives to new markets. With this strategy in mind, we have developed our plans for 2013.

Today’s budget is another step in our 10-yaer business plan. We are doing the things we set out to do and remain focused on delivering on our commitments. We are committed to the strategy we defined for you back in 2010. The only thing that has changed is that we have demonstrated we can bring SAGD projects on ahead of schedule and on budget. We expect ongoing uncertainty in global financial markets and volatility and commodity prices. As such we continue to build the flexibility into our plans to maintain financial resilience.

Before we get into the specifics of the 2013 budget, I’d like to take a moment to comment on this year. Overall I think it’s been a great year for the company and I’m pleased with the results that we have delivered. We are on pace to achieve 23% growth in our oil and liquids production as a result of strong execution from our teams.

We also completed expansions at Christina Lake and made progress on future phases at Foster Creek. We received regulatory approval for all three phases at Narrows Lake and partner sanction for phase A. We also continue to advance our emerging oil plays. Harbir is going to talk about those for you in a few moments.

Based on strong performance from our upstream operations, we believe that we will be in a position to add more than 250 million barrels of crude reserves at our Oil Sands operations in 2012. This is primarily driven by the regulatory approval and sanction at Narrows Lake. We also expect reserve growth from our conventional business as well.

For 2012 we anticipate approved finding and development costs to be in the range of $8 to $10 per barrel, which excludes changes in future development costs. We expect three year average SND to be about $6 a barrel. On the downstream side we successfully tested new heavy oil processing capacity at Wood River and increased our integration at what I think has been an opportune time.

So here is our 2012 report guard with some of the highlights that I just mentioned. Our goal is to continue to execute delivering predictable, reliable performance. I think it’s clear from the slide that we have had a very strong year. So we’ve moved through the fourth quarter; we have seen shifting market fundamentals. As such we have provided an update to our 2012 cash flow guidance to reflect these recent developments.

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