EX-99.3 4 q12024interimconsolidatedf.htm EX-99.3
Exhibit 99.3
Cenovus Energy Inc.
Interim Consolidated Financial Statements (unaudited)
For the Period Ended March 31, 2024
(Canadian Dollars)

CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

For the period ended March 31, 2024

TABLE OF CONTENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) |  | 3
CONSOLIDATED BALANCE SHEETS (UNAUDITED) |  | 4
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) |  | 5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |  | 6
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) |  | 7
1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES |  | 7
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE |  | 12
3. UPDATE TO ACCOUNTING POLICIES |  | 12
4. FINANCE COSTS, NET |  | 13
5. FOREIGN EXCHANGE (GAIN) LOSS, NET |  | 13
6. DIVESTITURES |  | 13
7. INCOME TAXES |  | 13
8. PER SHARE AMOUNTS |  | 14
9. EXPLORATION AND EVALUATION ASSETS, NET |  | 15
10. PROPERTY, PLANT AND EQUIPMENT, NET |  | 15
11. LEASES |  | 16
12. DEBT AND CAPITAL STRUCTURE |  | 16
13. CONTINGENT PAYMENTS |  | 19
14. DECOMMISSIONING LIABILITIES |  | 19
15. OTHER LIABILITIES |  | 19
16. SHARE CAPITAL AND WARRANTS |  | 20
17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |  | 21
18. STOCK-BASED COMPENSATION PLANS |  | 21
19. RELATED PARTY TRANSACTIONS |  | 22
20. FINANCIAL INSTRUMENTS |  | 22
21. RISK MANAGEMENT |  | 25
22. SUPPLEMENTARY CASH FLOW INFORMATION |  | 26
23. COMMITMENTS AND CONTINGENCIES |  | 28
24. PRIOR PERIOD REVISIONS |  | 28

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

For the period ended March 31,
($ millions, except per share amounts)

|  |  |  |  | Three Months Ended
| Notes |  |  |  |  |  | 2024 |  | 2023
Revenues (1) | 1 |  |  |  |  |  | 13,397 |  | 12,262
Expenses | 1 |  |  |  |  |  |  |  |
Purchased Product, Transportation and Blending (1) (2) |  |  |  |  |  |  | 8,708 |  | 8,561
Operating (2) |  |  |  |  |  |  | 1,555 |  | 1,636
(Gain) Loss on Risk Management | 20 |  |  |  |  |  | 41 |  | (6)
Depreciation, Depletion, Amortization and Exploration Expense (1) | 10,11 |  |  |  |  |  | 1,202 |  | 1,109
(Income) Loss From Equity-Accounted Affiliates |  |  |  |  |  |  | (9) |  | (6)
General and Administrative |  |  |  |  |  |  | 246 |  | 158
Finance Costs, Net (1) | 4 |  |  |  |  |  | 135 |  | 161
Integration, Transaction and Other Costs |  |  |  |  |  |  | 33 |  | 20
Foreign Exchange (Gain) Loss, Net | 5 |  |  |  |  |  | 99 |  | (7)
(Gain) Loss on Divestiture of Assets (1) | 6 |  |  |  |  |  | (105) |  | 32
Re-measurement of Contingent Payments | 13 |  |  |  |  |  | 28 |  | 17
Other (Income) Loss, Net |  |  |  |  |  |  | (90) |  | (6)
Earnings (Loss) Before Income Tax |  |  |  |  |  |  | 1,554 |  | 593
Income Tax Expense (Recovery) | 7 |  |  |  |  |  | 378 |  | (43)
Net Earnings (Loss) |  |  |  |  |  |  | 1,176 |  | 636
Other Comprehensive Income (Loss), Net of Tax | 17 |  |  |  |  |  |  |  |
Items That Will not be Reclassified to Profit or Loss: |  |  |  |  |  |  |  |  |
Actuarial Gain (Loss) Relating to Pension and Other Post-Employment Benefits |  |  |  |  |  |  | 14 |  | (3)
Items That may be Reclassified to Profit or Loss: |  |  |  |  |  |  |  |  |
Foreign Currency Translation Adjustment |  |  |  |  |  |  | 268 |  | (19)
Total Other Comprehensive Income (Loss), Net of Tax |  |  |  |  |  |  | 282 |  | (22)
Comprehensive Income (Loss) |  |  |  |  |  |  | 1,458 |  | 614
Net Earnings (Loss) Per Common Share ($) | 8 |  |  |  |  |  |  |  |
Basic |  |  |  |  |  |  | 0.62 |  | 0.33
Diluted |  |  |  |  |  |  | 0.62 |  | 0.32

(1)Revised presentation as of January 1, 2024. See Note 3.
(2)Comparative periods reflect certain revisions. See Note 24.
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 3

CONSOLIDATED BALANCE SHEETS (unaudited)

As at
($ millions)

| Notes |  | March 31, 2024 |  | December 31, 2023
Assets |  |  |  |  |
Current Assets |  |  |  |  |
Cash and Cash Equivalents |  |  | 2,400 |  | 2,227
Accounts Receivable and Accrued Revenues |  |  | 3,801 |  | 3,035
Income Tax Receivable |  |  | 201 |  | 416
Inventories |  |  | 4,436 |  | 4,030
Total Current Assets |  |  | 10,838 |  | 9,708
Restricted Cash |  |  | 219 |  | 211
Exploration and Evaluation Assets, Net | 1,9 |  | 750 |  | 738
Property, Plant and Equipment, Net | 1,10 |  | 37,251 |  | 37,250
Right-of-Use Assets, Net | 1,11 |  | 1,635 |  | 1,680
Income Tax Receivable |  |  | 25 |  | 25
Investments in Equity-Accounted Affiliates |  |  | 428 |  | 366
Other Assets |  |  | 300 |  | 318
Deferred Income Taxes |  |  | 625 |  | 696
Goodwill | 1 |  | 2,923 |  | 2,923
Total Assets |  |  | 54,994 |  | 53,915
Liabilities and Equity |  |  |  |  |
Current Liabilities |  |  |  |  |
Accounts Payable and Accrued Liabilities |  |  | 5,811 |  | 5,480
Income Tax Payable |  |  | 113 |  | 88
Short-Term Borrowings | 12 |  | — |  | 179
Lease Liabilities | 11 |  | 299 |  | 299
Contingent Payments | 13 |  | 142 |  | 164
Total Current Liabilities |  |  | 6,365 |  | 6,210
Long-Term Debt | 12 |  | 7,227 |  | 7,108
Lease Liabilities | 11 |  | 2,300 |  | 2,359
Decommissioning Liabilities | 14 |  | 4,123 |  | 4,155
Other Liabilities | 15 |  | 1,156 |  | 1,183
Deferred Income Taxes |  |  | 4,078 |  | 4,188
Total Liabilities |  |  | 25,249 |  | 25,203
Shareholders’ Equity |  |  | 29,731 |  | 28,698
Non-Controlling Interest |  |  | 14 |  | 14
Total Liabilities and Equity |  |  | 54,994 |  | 53,915
Commitments and Contingencies | 23 |  |  |  |

See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 4

CONSOLIDATED STATEMENTS OF EQUITY (unaudited)

($ millions)

| Shareholders’ Equity |  |
| Common Shares |  | Preferred Shares |  | Warrants |  | Paid in Surplus |  | Retained Earnings |  | AOCI (1) |  | Total |  | Non-Controlling Interest
| (Note 16) |  | (Note 16) |  | (Note 16) |  |  |  |  |  | (Note 17) |  |  |  |
As at December 31, 2022 | 16,320 |  | 519 |  | 184 |  | 2,691 |  | 6,392 |  | 1,470 |  | 27,576 |  | 13
Net Earnings (Loss) | — |  | — |  | — |  | — |  | 636 |  | — |  | 636 |  | —
Other Comprehensive Income (Loss), Net of Tax | — |  | — |  | — |  | — |  | — |  | (22) |  | (22) |  | —
Total Comprehensive Income (Loss) | — |  | — |  | — |  | — |  | 636 |  | (22) |  | 614 |  | —
Common Shares Issued Under Stock Option Plans | 6 |  | — |  | — |  | (2) |  | — |  | — |  | 4 |  | —
Purchase of Common Shares Under NCIB (2) | (13) |  | — |  | — |  | (27) |  | — |  | — |  | (40) |  | —
Warrants Exercised | 4 |  | — |  | (1) |  | — |  | — |  | — |  | 3 |  | —
Stock-Based Compensation Expense | — |  | — |  | — |  | 4 |  | — |  | — |  | 4 |  | —
Base Dividends on Common Shares | — |  | — |  | — |  | — |  | (200) |  | — |  | (200) |  | —
Dividends on Preferred Shares | — |  | — |  | — |  | — |  | (9) |  | — |  | (9) |  | —
As at March 31, 2023 | 16,317 |  | 519 |  | 183 |  | 2,666 |  | 6,819 |  | 1,448 |  | 27,952 |  | 13
As at December 31, 2023 | 16,031 |  | 519 |  | 25 |  | 2,002 |  | 8,913 |  | 1,208 |  | 28,698 |  | 14
Net Earnings (Loss) | — |  | — |  | — |  | — |  | 1,176 |  | — |  | 1,176 |  | —
Other Comprehensive Income (Loss), Net of Tax | — |  | — |  | — |  | — |  | — |  | 282 |  | 282 |  | —
Total Comprehensive Income (Loss) | — |  | — |  | — |  | — |  | 1,176 |  | 282 |  | 1,458 |  | —
Common Shares Issued Under Stock Option Plans | 5 |  | — |  | — |  | (1) |  | — |  | — |  | 4 |  | —
Purchase of Common Shares Under NCIB (2) | (63) |  | — |  | — |  | (102) |  | — |  | — |  | (165) |  | —
Warrants Exercised | 3 |  | — |  | (1) |  | — |  | — |  | — |  | 2 |  | —
Stock-Based Compensation Expense | — |  | — |  | — |  | 5 |  | — |  | — |  | 5 |  | —
Base Dividends on Common Shares | — |  | — |  | — |  | — |  | (262) |  | — |  | (262) |  | —
Dividends on Preferred Shares | — |  | — |  | — |  | — |  | (9) |  | — |  | (9) |  | —
As at March 31, 2024 | 15,976 |  | 519 |  | 24 |  | 1,904 |  | 9,818 |  | 1,490 |  | 29,731 |  | 14

(1)Accumulated other comprehensive income (loss) (“AOCI”).
(2)Normal course issuer bid (“NCIB”).
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 5

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

For the period ended March 31,
($ millions)

|  |  |  | Three Months Ended
| Notes |  |  |  |  | 2024 |  | 2023
Operating Activities |  |  |  |  |  |  |  |
Net Earnings (Loss) |  |  |  |  |  | 1,176 |  | 636
Depreciation, Depletion and Amortization | 10,11 |  |  |  |  | 1,195 |  | 1,105
Deferred Income Tax Expense (Recovery) | 7 |  |  |  |  | (32) |  | (370)
Unrealized (Gain) Loss on Risk Management | 20 |  |  |  |  | 31 |  | (30)
Unrealized Foreign Exchange (Gain) Loss | 5 |  |  |  |  | 124 |  | 14
(Gain) Loss on Divestiture of Assets (1) | 6 |  |  |  |  | (105) |  | 32
Re-measurement of Contingent Payments | 13 |  |  |  |  | 28 |  | 17
Unwinding of Discount on Decommissioning Liabilities | 14 |  |  |  |  | 57 |  | 55
(Income) Loss From Equity-Accounted Affiliates |  |  |  |  |  | (9) |  | (6)
Distributions Received From Equity-Accounted Affiliates |  |  |  |  |  | 31 |  | 23
Stock-Based Compensation, Net of Payments |  |  |  |  |  | (154) |  | (71)
Other |  |  |  |  |  | (100) |  | (10)
Settlement of Decommissioning Liabilities | 14 |  |  |  |  | (48) |  | (48)
Net Change in Non-Cash Working Capital | 22 |  |  |  |  | (269) |  | (1,633)
Cash From (Used in) Operating Activities |  |  |  |  |  | 1,925 |  | (286)
Investing Activities |  |  |  |  |  |  |  |
Acquisitions, Net of Cash Acquired |  |  |  |  |  | (10) |  | (465)
Capital Investment | 1 |  |  |  |  | (1,036) |  | (1,101)
Proceeds From Divestitures | 6 |  |  |  |  | 25 |  | 8
Net Change in Investments and Other |  |  |  |  |  | (13) |  | (13)
Net Change in Non-Cash Working Capital | 22 |  |  |  |  | (101) |  | (184)
Cash From (Used in) Investing Activities |  |  |  |  |  | (1,135) |  | (1,755)
Net Cash Provided (Used) Before Financing Activities |  |  |  |  |  | 790 |  | (2,041)
Financing Activities | 22 |  |  |  |  |  |  |
Net Issuance (Repayment) of Short-Term Borrowings |  |  |  |  |  | (175) |  | (115)
Principal Repayment of Leases | 11 |  |  |  |  | (70) |  | (70)
Common Shares Issued Under Stock Option Plans |  |  |  |  |  | 4 |  | 4
Purchase of Common Shares Under NCIB | 16 |  |  |  |  | (165) |  | (40)
Proceeds From Exercise of Warrants |  |  |  |  |  | 2 |  | 3
Base Dividends Paid on Common Shares | 8 |  |  |  |  | (262) |  | (200)
Dividends Paid on Preferred Shares | 8 |  |  |  |  | (9) |  | (18)
Other |  |  |  |  |  | (2) |  | 1
Cash From (Used in) Financing Activities |  |  |  |  |  | (677) |  | (435)
Effect of Foreign Exchange on Cash and Cash Equivalents |  |  |  |  |  | 60 |  | 1
Increase (Decrease) in Cash and Cash Equivalents |  |  |  |  |  | 173 |  | (2,475)
Cash and Cash Equivalents, Beginning of Period |  |  |  |  |  | 2,227 |  | 4,524
Cash and Cash Equivalents, End of Period |  |  |  |  |  | 2,400 |  | 2,049

(1)Revised presentation as of January 1, 2024. See Note 3.
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 6

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES

Cenovus Energy Inc. (“Cenovus” or the “Company”) is an integrated energy company with crude oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States (“U.S.”).
Cenovus is incorporated under the Canada Business Corporations Act and its common shares and common share purchase warrants are listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange. Cenovus’s cumulative redeemable preferred shares series 1, 2, 3, 5 and 7 are listed on the TSX. The executive and registered office is located at 4100, 225 6 Avenue S.W., Calgary, Alberta, Canada, T2P 1N2. Information on the Company’s basis of preparation for these interim Consolidated Financial Statements is found in Note 2.
Management has determined the operating segments based on information regularly reviewed for the purposes of decision making, allocating resources and assessing operational performance by Cenovus’s chief operating decision maker. The Company’s operating segments are aggregated based on their geographic locations, the nature of the businesses or a combination of these factors. The Company evaluates the financial performance of its operating segments primarily based on operating margin.
The Company operates through the following reportable segments:
Upstream Segments
•Oil Sands, includes the development and production of bitumen and heavy oil in northern Alberta and Saskatchewan. Cenovus’s oil sands assets include Foster Creek, Christina Lake, Sunrise, Lloydminster thermal and Lloydminster conventional heavy oil assets. Cenovus jointly owns and operates pipeline gathering systems and terminals through the equity-accounted investment in Husky Midstream Limited Partnership (“HMLP”). The sale and transportation of Cenovus’s production and third-party commodity trading volumes are managed and marketed through access to capacity on third-party pipelines and storage facilities in both Canada and the U.S. to optimize product mix, delivery points, transportation commitments and customer diversification.
•Conventional, includes assets rich in natural gas liquids (“NGLs”) and natural gas within the Elmworth-Wapiti, Kaybob‑Edson, Clearwater and Rainbow Lake operating areas in Alberta and British Columbia and interests in numerous natural gas processing facilities. Cenovus’s NGLs and natural gas production is marketed and transported, with additional third-party commodity trading volumes, through access to capacity on third-party pipelines, export terminals and storage facilities. These provide flexibility for market access to optimize product mix, delivery points, transportation commitments and customer diversification.
•Offshore, includes offshore operations, exploration and development activities in China and the east coast of Canada, as well as the equity-accounted investment in Husky-CNOOC Madura Ltd. (“HCML”), which is engaged in the exploration for and production of, NGLs and natural gas in offshore Indonesia.
Downstream Segments
•Canadian Refining, includes the owned and operated Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt and other ancillary products. Cenovus also owns and operates the Bruderheim crude-by-rail terminal and two ethanol plants. The Company’s commercial fuels business across Canada is included in this segment. Cenovus markets its production and third-party commodity trading volumes in an effort to use its integrated network of assets to maximize value.
•U.S. Refining, includes the refining of crude oil to produce gasoline, diesel, jet fuel, asphalt and other products at the wholly-owned Lima, Superior and Toledo refineries, and the jointly-owned Wood River and Borger refineries, held through WRB Refining LP (“WRB”), a jointly owned entity with operator Phillips 66. Cenovus markets some of its own and third-party refined products including gasoline, diesel, jet fuel and asphalt.
Corporate and Eliminations
Corporate and Eliminations, includes Cenovus-wide costs for general and administrative, financing activities, gains and losses on risk management for corporate related derivative instruments and foreign exchange. Eliminations include adjustments for feedstock and internal usa ge of crude oil, nat ural gas, condensate, other NGLs and refined products between segments; transloading services provided to the Oil Sands segment by the Company’s crude-by-rail terminal; the sale of condensate extracted from blended crude oil production in the Canadian Refining segment and sold to the Oil Sands segment; and unrealized profits in inventory. Eliminations are recorded based on market prices.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 7

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
A) Results of Operations – Segment and Operational Information

| Upstream
For the three months ended | Oil Sands |  | Conventional |  | Offshore |  | Total
March 31, | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Gross Sales (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
External Sales | 5,013 |  | 4,832 |  | 377 |  | 622 |  | 357 |  | 473 |  | 5,747 |  | 5,927
Intersegment Sales | 1,615 |  | 875 |  | 502 |  | 415 |  | — |  | — |  | 2,117 |  | 1,290
| 6,628 |  | 5,707 |  | 879 |  | 1,037 |  | 357 |  | 473 |  | 7,864 |  | 7,217
Royalties | (697) |  | (516) |  | (24) |  | (54) |  | (26) |  | (26) |  | (747) |  | (596)
Revenues | 5,931 |  | 5,191 |  | 855 |  | 983 |  | 331 |  | 447 |  | 7,117 |  | 6,621
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased Product (1) | 289 |  | 355 |  | 482 |  | 483 |  | — |  | — |  | 771 |  | 838
Transportation and Blending (1) | 2,733 |  | 2,941 |  | 78 |  | 81 |  | — |  | 5 |  | 2,811 |  | 3,027
Operating | 660 |  | 737 |  | 153 |  | 150 |  | 85 |  | 142 |  | 898 |  | 1,029
Realized (Gain) Loss on Risk Management | 13 |  | 8 |  | (7) |  | 8 |  | — |  | — |  | 6 |  | 16
Operating Margin | 2,236 |  | 1,150 |  | 149 |  | 261 |  | 246 |  | 300 |  | 2,631 |  | 1,711
Unrealized (Gain) Loss on Risk Management | (13) |  | (34) |  | 6 |  | (20) |  | — |  | — |  | (7) |  | (54)
Depreciation, Depletion and Amortization | 774 |  | 715 |  | 110 |  | 95 |  | 131 |  | 128 |  | 1,015 |  | 938
Exploration Expense | 3 |  | 2 |  | — |  | — |  | 4 |  | 2 |  | 7 |  | 4
(Income) Loss From Equity- Accounted Affiliates | — |  | — |  | 1 |  | — |  | (10) |  | (6) |  | (9) |  | (6)
Segment Income (Loss) | 1,472 |  | 467 |  | 32 |  | 186 |  | 121 |  | 176 |  | 1,625 |  | 829

| Downstream
| Canadian Refining |  | U.S. Refining |  | Total
For the three months ended March 31, | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Gross Sales (1) |  |  |  |  |  |  |  |  |  |  |
External Sales | 1,163 |  | 1,302 |  | 7,234 |  | 5,629 |  | 8,397 |  | 6,931
Intersegment Sales | 169 |  | 206 |  | 1 |  | — |  | 170 |  | 206
| 1,332 |  | 1,508 |  | 7,235 |  | 5,629 |  | 8,567 |  | 7,137
Royalties | — |  | — |  | — |  | — |  | — |  | —
Revenues | 1,332 |  | 1,508 |  | 7,235 |  | 5,629 |  | 8,567 |  | 7,137
Expenses |  |  |  |  |  |  |  |  |  |  |
Purchased Product (1) | 1,087 |  | 1,093 |  | 6,132 |  | 4,898 |  | 7,219 |  | 5,991
Transportation and Blending | — |  | — |  | — |  | — |  | — |  | —
Operating | 177 |  | 152 |  | 610 |  | 602 |  | 787 |  | 754
Realized (Gain) Loss on Risk Management | — |  | — |  | 1 |  | 1 |  | 1 |  | 1
Operating Margin | 68 |  | 263 |  | 492 |  | 128 |  | 560 |  | 391
Unrealized (Gain) Loss on Risk Management | — |  | — |  | 8 |  | (6) |  | 8 |  | (6)
Depreciation, Depletion and Amortization | 44 |  | 43 |  | 111 |  | 103 |  | 155 |  | 146
Exploration Expense | — |  | — |  | — |  | — |  | — |  | —
(Income) Loss From Equity-Accounted Affiliates | — |  | — |  | — |  | — |  | — |  | —
Segment Income (Loss) | 24 |  | 220 |  | 373 |  | 31 |  | 397 |  | 251

(1)Comparative periods reflect certain revisions. See Note 24.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 8

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

|  |  | Corporate and Eliminations |  | Consolidated
For the three months ended March 31, |  |  |  |  |  | 2024 |  | 2023 |  | 2024 |  | 2023
Gross Sales (1) |  |  |  |  |  |  |  |  |  |  |  |  |  |
External Sales |  |  |  |  |  |  |  | — |  | — |  | 14,144 |  | 12,858
Intersegment Sales |  |  |  |  |  |  |  | (2,287) |  | (1,496) |  | — |  | —
|  |  |  |  |  |  |  | (2,287) |  | (1,496) |  | 14,144 |  | 12,858
Royalties |  |  |  |  |  |  |  | — |  | — |  | (747) |  | (596)
Revenues |  |  |  |  |  |  |  | (2,287) |  | (1,496) |  | 13,397 |  | 12,262
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased Product (1) |  |  |  |  |  |  |  | (1,857) |  | (1,020) |  | 6,133 |  | 5,809
Transportation and Blending (1) |  |  |  |  |  |  |  | (236) |  | (275) |  | 2,575 |  | 2,752
Purchased Product, Transportation and Blending (2) |  |  |  |  |  |  |  | (2,093) |  | (1,295) |  | 8,708 |  | 8,561
Operating (1) |  |  |  |  |  |  |  | (130) |  | (147) |  | 1,555 |  | 1,636
Realized (Gain) Loss on Risk Management |  |  |  |  |  |  |  | 3 |  | 7 |  | 10 |  | 24
Unrealized (Gain) Loss on Risk Management |  |  |  |  |  |  |  | 30 |  | 30 |  | 31 |  | (30)
Depreciation, Depletion and Amortization |  |  |  |  |  |  |  | 25 |  | 21 |  | 1,195 |  | 1,105
Exploration Expense |  |  |  |  |  |  |  | — |  | — |  | 7 |  | 4
(Income) Loss From Equity-Accounted Affiliates |  |  |  |  |  |  |  | — |  | — |  | (9) |  | (6)
Segment Income (Loss) |  |  |  |  |  |  |  | (122) |  | (112) |  | 1,900 |  | 968
General and Administrative |  |  |  |  |  |  |  | 246 |  | 158 |  | 246 |  | 158
Finance Costs, Net (2) |  |  |  |  |  |  |  | 135 |  | 161 |  | 135 |  | 161
Integration, Transaction and Other Costs |  |  |  |  |  |  |  | 33 |  | 20 |  | 33 |  | 20
Foreign Exchange (Gain) Loss, Net |  |  |  |  |  |  |  | 99 |  | (7) |  | 99 |  | (7)
(Gain) Loss on Divestiture of Assets (2) |  |  |  |  |  |  |  | (105) |  | 32 |  | (105) |  | 32
Re-measurement of Contingent Payments |  |  |  |  |  |  |  | 28 |  | 17 |  | 28 |  | 17
Other (Income) Loss, Net |  |  |  |  |  |  |  | (90) |  | (6) |  | (90) |  | (6)
|  |  |  |  |  |  |  | 346 |  | 375 |  | 346 |  | 375
Earnings (Loss) Before Income Tax |  |  |  |  |  |  |  |  |  |  |  | 1,554 |  | 593
Income Tax Expense (Recovery) |  |  |  |  |  |  |  |  |  |  |  | 378 |  | (43)
Net Earnings (Loss) |  |  |  |  |  |  |  |  |  |  |  | 1,176 |  | 636

(1)Comparative periods reflect certain revisions. See Note 24.
(2)Revised presentation as of January 1, 2024. See Note 3.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 9

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
B) External Sales by Product

| Upstream
For the three months ended | Oil Sands |  | Conventional |  | Offshore |  | Total
March 31, | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Crude Oil | 4,875 |  | 4,667 |  | 55 |  | 102 |  | 41 |  | 150 |  | 4,971 |  | 4,919
Natural Gas and Other | 80 |  | 93 |  | 236 |  | 451 |  | 233 |  | 242 |  | 549 |  | 786
NGLs (1) | 58 |  | 72 |  | 86 |  | 69 |  | 83 |  | 81 |  | 227 |  | 222
External Sales | 5,013 |  | 4,832 |  | 377 |  | 622 |  | 357 |  | 473 |  | 5,747 |  | 5,927

| Downstream
| Canadian Refining |  | U.S. Refining |  | Total
For the three months ended March 31, | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Synthetic Crude Oil | 465 |  | 462 |  | — |  | — |  | 465 |  | 462
Distillates (2) | 392 |  | 480 |  | 2,731 |  | 2,269 |  | 3,123 |  | 2,749
Gasoline | 103 |  | 111 |  | 3,318 |  | 2,660 |  | 3,421 |  | 2,771
Asphalt | 73 |  | 89 |  | 146 |  | 67 |  | 219 |  | 156
Other Products and Services | 130 |  | 160 |  | 1,039 |  | 633 |  | 1,169 |  | 793
External Sales | 1,163 |  | 1,302 |  | 7,234 |  | 5,629 |  | 8,397 |  | 6,931

(1)Third-party condensate sales are included within NGLs.
(2)Includes diesel and jet fuel.
C) Geographical Information

|  |  |  | Revenues (1)
For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Canada (2) |  |  |  |  | 5,204 |  | 6,105
United States (2) |  |  |  |  | 7,902 |  | 5,851
China |  |  |  |  | 291 |  | 306
Consolidated |  |  |  |  | 13,397 |  | 12,262

(1)Revenues by country are classified based on where the operations are located.
(2)Comparative periods reflect certain revisions. See Note 24.

| Non-Current Assets (1)
| March 31, |  | December 31,
As at | 2024 |  | 2023
Canada | 35,927 |  | 35,876
United States | 5,318 |  | 5,230
China | 1,521 |  | 1,608
Indonesia | 324 |  | 344
Consolidated | 43,090 |  | 43,058

(1)Includes exploration and evaluation (“E&E”) assets, property, plant and equipment (“PP&E”), right-of-use (“ROU”) assets, income tax receivable, investments in equity-accounted affiliates, precious metals and goodwill.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 10

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
D) Assets by Segment

| E&E Assets |  | PP&E |  | ROU Assets
| March 31, |  | December 31, |  | March 31, |  | December 31, |  | March 31, |  | December 31,
As at | 2024 |  | 2023 |  | 2024 |  | 2023 |  | 2024 |  | 2023
Oil Sands | 733 |  | 729 |  | 24,350 |  | 24,443 |  | 811 |  | 849
Conventional | 7 |  | — |  | 2,187 |  | 2,209 |  | — |  | 1
Offshore | 10 |  | 9 |  | 2,839 |  | 2,798 |  | 100 |  | 102
Canadian Refining | — |  | — |  | 2,462 |  | 2,469 |  | 25 |  | 28
U.S. Refining | — |  | — |  | 5,107 |  | 5,014 |  | 273 |  | 268
Corporate and Eliminations | — |  | — |  | 306 |  | 317 |  | 426 |  | 432
Consolidated | 750 |  | 738 |  | 37,251 |  | 37,250 |  | 1,635 |  | 1,680

| Goodwill |  | Total Assets
| March 31, |  | December 31, |  | March 31, |  | December 31,
As at | 2024 |  | 2023 |  | 2024 |  | 2023
Oil Sands | 2,923 |  | 2,923 |  | 32,282 |  | 31,673
Conventional | — |  | — |  | 2,449 |  | 2,429
Offshore | — |  | — |  | 3,586 |  | 3,511
Canadian Refining | — |  | — |  | 3,016 |  | 2,960
U.S. Refining | — |  | — |  | 9,130 |  | 8,660
Corporate and Eliminations | — |  | — |  | 4,531 |  | 4,682
Consolidated | 2,923 |  | 2,923 |  | 54,994 |  | 53,915

E) Capital Expenditures (1)

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Capital Investment |  |  |  |  |  |  |
Oil Sands |  |  |  |  | 647 |  | 635
Conventional |  |  |  |  | 126 |  | 141
Offshore |  |  |  |  |  |  |
Atlantic |  |  |  |  | 158 |  | 100
Asia Pacific |  |  |  |  | 1 |  | —
Total Upstream |  |  |  |  | 932 |  | 876
Canadian Refining |  |  |  |  | 31 |  | 27
U.S. Refining |  |  |  |  | 67 |  | 194
Total Downstream |  |  |  |  | 98 |  | 221
Corporate and Eliminations |  |  |  |  | 6 |  | 4
|  |  |  |  | 1,036 |  | 1,101
Acquisitions |  |  |  |  |  |  |
Oil Sands |  |  |  |  | 2 |  | 2
Conventional |  |  |  |  | 8 |  | 2
U.S. Refining |  |  |  |  | — |  | 336
|  |  |  |  | 10 |  | 340
Total Capital Expenditures |  |  |  |  | 1,046 |  | 1,441

(1)Includes expenditures on PP&E, E&E assets and capitalized interest.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 11

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

In these interim Consolidated Financial Statements, unless otherwise indicated, all dollars are expressed in Canadian dollars. All references to C$ or $ are to Canadian dollars and references to US$ are to U.S. dollars.
These interim Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”) (the “IFRS Accounting Standards”) applicable to the preparation of interim financial statements, including International Accounting Standard 34, “Interim Financial Reporting”, and were prepared following the same accounting policies and methods of computation as the annual Consolidated Financial Statements for the year ended December 31, 2023, except for income taxes and updates to accounting policies as disclosed in Note 3. Income taxes on earnings or loss in the interim period are accrued using the income tax rate that would be applicable to the expected annual earnings or loss.
Certain information and disclosures normally included in the notes to the annual Consolidated Financial Statements were condensed. Accordingly, these interim Consolidated Financial Statements should be read in conjunction with the annual Consolidated Financial Statements for the year ended December 31, 2023, which were prepared in accordance with IFRS Accounting Standards.
These interim Consolidated Financial Statements were approved by the Board of Directors effective April 30, 2024.

3. UPDATE TO ACCOUNTING POLICIES

A) Adjustments to the Consolidated Statements of Comprehensive Income (Loss)
As of January 1, 2024, the Company updated its accounting policies to aggregate certain items presented in the Consolidated Statements of Comprehensive Income (Loss) to more appropriately reflect the integrated operations of the business. There were no re-measurements to balances. Certain historical disaggregated balances continue to be presented in Note 1.
The following presentation changes were made, with comparative periods being re-presented:
•Gross sales and royalties were aggregated and presented as ‘Revenues’.
•Purchased product and transportation and blending were aggregated and presented as ‘Purchased Product, Transportation and Blending’.
•Depreciation, depletion and amortization, and exploration expense were aggregated and presented as ‘Depreciation, Depletion, Amortization and Exploration Expense’.
•Finance costs and interest income were aggregated and presented as ‘Finance Costs, Net’.
•Revaluation (gain) loss and (gain) loss on divestiture of assets were aggregated and presented as ‘(Gain) Loss on Divestiture of Assets’.
B) Recent Accounting Pronouncements
On April 9, 2024, the IASB issued IFRS 18, “Presentation and Disclosure in Financial Statements” which will replace International Accounting Standard 1, “Presentation of Financial Statements”. IFRS 18 will establish a revised structure for the Consolidated Statements of Comprehensive Income (Loss) and improve comparability across entities and reporting periods.
IFRS 18 is effective for annual periods beginning on or after January 1, 2027. The standard is to be applied retrospectively, with certain transition provisions. The Company is currently evaluating the impact of adopting IFRS 18 on the Consolidated Financial Statements.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 12

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

4. FINANCE COSTS, NET

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Interest Expense – Short-Term Borrowings and Long-Term Debt |  |  |  |  | 76 |  | 96
Interest Expense – Lease Liabilities (Note 11) |  |  |  |  | 39 |  | 40
Unwinding of Discount on Decommissioning Liabilities (Note 14) |  |  |  |  | 57 |  | 55
Other |  |  |  |  | 6 |  | 6
Capitalized Interest |  |  |  |  | (8) |  | (3)
Finance Costs |  |  |  |  | 170 |  | 194
Interest Income |  |  |  |  | (35) |  | (33)
|  |  |  |  | 135 |  | 161

5. FOREIGN EXCHANGE (GAIN) LOSS, NET

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Unrealized Foreign Exchange (Gain) Loss on Translation of: |  |  |  |  |  |  |
U.S. Dollar Debt |  |  |  |  | 123 |  | (5)
Other |  |  |  |  | 1 |  | 19
Unrealized Foreign Exchange (Gain) Loss |  |  |  |  | 124 |  | 14
Realized Foreign Exchange (Gain) Loss |  |  |  |  | (25) |  | (21)
|  |  |  |  | 99 |  | (7)

6. DIVESTITURES

On February 6, 2024, the Company closed a transaction with Athabasca Oil Corporation (“Athabasca”) to create Duvernay Energy Corporation (“Duvernay”). Cenovus contributed non-monetary assets with a fair value of $94 million and cash of $18 million, before closing adjustments, in exchange for a 30 percent interest in Duvernay. The Company recognized an investment of $84 million in Duvernay and a before-tax gain on divestiture of assets of $65 million (after-tax gain – $50 million), reflecting the difference between the carrying value and fair value of contributed assets to the extent of Athabasca’s share.
On March 6, 2024, the Company closed the sale of certain Clearwater assets in its Conventional segment for net proceeds of $19 million and recorded a before-tax gain of $36 million (after-tax gain – $27 million).

7. INCOME TAXES

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Current Tax |  |  |  |  |  |  |
Canada |  |  |  |  | 346 |  | 258
United States |  |  |  |  | 11 |  | 17
Asia Pacific |  |  |  |  | 44 |  | 46
Other International |  |  |  |  | 9 |  | 6
Total Current Tax Expense (Recovery) |  |  |  |  | 410 |  | 327
Deferred Tax Expense (Recovery) |  |  |  |  | (32) |  | (370)
|  |  |  |  | 378 |  | (43)

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 13

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

8. PER SHARE AMOUNTS

A) Net Earnings (Loss) Per Common Share – Basic and Diluted

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Net Earnings (Loss) |  |  |  |  | 1,176 |  | 636
Effect of Cumulative Dividends on Preferred Shares |  |  |  |  | (9) |  | (9)
Net Earnings (Loss) – Basic and Diluted |  |  |  |  | 1,167 |  | 627
Basic – Weighted Average Number of Shares (thousands) |  |  |  |  | 1,867,793 |  | 1,908,280
Dilutive Effect of Warrants |  |  |  |  | 5,466 |  | 41,038
Dilutive Effect of Net Settlement Rights |  |  |  |  | 5,041 |  | 7,137
Dilutive Effect of Cenovus Replacement Stock Options |  |  |  |  | — |  | 1,391
Diluted – Weighted Average Number of Shares (thousands) |  |  |  |  | 1,878,300 |  | 1,957,846
Net Earnings (Loss) Per Common Share – Basic ($) |  |  |  |  | 0.62 |  | 0.33
Net Earnings (Loss) Per Common Share – Diluted (1) (2) ($) |  |  |  |  | 0.62 |  | 0.32

(1)For the three months ended March 31, 2024, net earnings of $3 million (2023 – $nil), and 0.4 million common shares (2023 – 0.1 million), related to the assumed exercise of the Cenovus replacement stock options were excluded from the calculation of dilutive net earnings (loss) per share as the effect was anti-dilutive.
(2)For the three months ended March 31, 2024, net settlement rights (“NSRs”) of 3.7 million (2023 – 1.4 million) were excluded from the calculation of diluted weighted average number of shares as the effect was anti-dilutive.
B) Common Share Dividends

| 2024 |  | 2023
For the three months ended March 31, | Per Share |  | Amount |  | Per Share |  | Amount
Base Dividends | 0.140 |  | 262 |  | 0.105 |  | 200
Variable Dividends | — |  | — |  | — |  | —
Total Common Share Dividends Declared and Paid | 0.140 |  | 262 |  | 0.105 |  | 200

The declaration of common share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.
On April 30, 2024, the Company’s Board of Directors declared a second quarter base dividend of $0.180 per common share, payable on June 28, 2024, to common shareholders of record as at June 14, 2024.
On April 30, 2024, the Company’s Board of Directors declared a second quarter variable dividend of $0.135 per common share, payable on May 31, 2024, to common shareholders of record as at May 17, 2024.
C) Preferred Share Dividends

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Series 1 First Preferred Shares |  |  |  |  | 2 |  | 2
Series 2 First Preferred Shares |  |  |  |  | — |  | —
Series 3 First Preferred Shares |  |  |  |  | 3 |  | 3
Series 5 First Preferred Shares |  |  |  |  | 2 |  | 2
Series 7 First Preferred Shares |  |  |  |  | 2 |  | 2
Total Preferred Share Dividends Declared |  |  |  |  | 9 |  | 9

The declaration of preferred share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.
In the three months ended March 31, 2024, the Company paid preferred share dividends of $9 million (2023 – $9 million). O n April 1, 2024, the Company paid preferred share divide nds of $9 million, as declared on February 14, 2024.
O n April 30, 2024, the Company’s Board of Directors declared second quarter divide nds of $9 million payable on July 2, 2024, to preferred shareholders of record as at June 14, 2024.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 14

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

9. EXPLORATION AND EVALUATION ASSETS, NET

| Total
As at December 31, 2023 | 738
Acquisition | 7
Additions | 5
As at March 31, 2024 | 750

10. PROPERTY, PLANT AND EQUIPMENT, NET

| Crude Oil and Natural Gas Properties |  | Processing, Transportation and Storage Assets |  | Refining Assets |  | Other Assets (1) |  | Total
COST |  |  |  |  |  |  |  |  |
As at December 31, 2023 | 47,425 |  | 272 |  | 12,770 |  | 1,908 |  | 62,375
Acquisitions | 3 |  | — |  | — |  | — |  | 3
Additions | 927 |  | 1 |  | 98 |  | 5 |  | 1,031
Change in Decommissioning Liabilities | 7 |  | — |  | — |  | — |  | 7
Divestitures | (120) |  | — |  | — |  | — |  | (120)
Exchange Rate Movements and Other | 47 |  | (33) |  | 249 |  | 2 |  | 265
As at March 31, 2024 | 48,289 |  | 240 |  | 13,117 |  | 1,915 |  | 63,561
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION |  |  |  |  |  |  |  |  |
As at December 31, 2023 | 17,975 |  | 129 |  | 5,667 |  | 1,354 |  | 25,125
Depreciation, Depletion and Amortization | 975 |  | 3 |  | 130 |  | 19 |  | 1,127
Divestitures | (79) |  | — |  | — |  | — |  | (79)
Exchange Rate Movements and Other | 42 |  | (33) |  | 127 |  | 1 |  | 137
As at March 31, 2024 | 18,913 |  | 99 |  | 5,924 |  | 1,374 |  | 26,310
CARRYING VALUE |  |  |  |  |  |  |  |  |
As at December 31, 2023 | 29,450 |  | 143 |  | 7,103 |  | 554 |  | 37,250
As at March 31, 2024 | 29,376 |  | 141 |  | 7,193 |  | 541 |  | 37,251

(1)Includes assets within the commercial fuels business, office furniture, fixtures, leasehold improvements, information technology and aircraft.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 15

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

11. LEASES

A) Right-of-Use Assets, Net

| Real Estate |  | Transportation and Storage Assets (1) |  | Refining Assets |  | Other Assets (2) |  | Total
COST |  |  |  |  |  |  |  |  |
As at December 31, 2023 | 588 |  | 1,964 |  | 161 |  | 70 |  | 2,783
Additions | — |  | — |  | — |  | 6 |  | 6
Exchange Rate Movements and Other | 3 |  | 15 |  | 7 |  | 4 |  | 29
As at March 31, 2024 | 591 |  | 1,979 |  | 168 |  | 80 |  | 2,818
ACCUMULATED DEPRECIATION |  |  |  |  |  |  |  |  |
As at December 31, 2023 | 156 |  | 863 |  | 65 |  | 19 |  | 1,103
Depreciation | 9 |  | 49 |  | 6 |  | 4 |  | 68
Exchange Rate Movements and Other | — |  | 8 |  | 3 |  | 1 |  | 12
As at March 31, 2024 | 165 |  | 920 |  | 74 |  | 24 |  | 1,183
CARRYING VALUE |  |  |  |  |  |  |  |  |
As at December 31, 2023 | 432 |  | 1,101 |  | 96 |  | 51 |  | 1,680
As at March 31, 2024 | 426 |  | 1,059 |  | 94 |  | 56 |  | 1,635

(1)Includes railcars, barges, vessels, pipelines, caverns and storage tanks.
(2)Includes assets in the commercial fuels business, fleet vehicles, camp and other equipment.
B) Lease Liabilities

| Total
As at December 31, 2023 | 2,658
Additions | 4
Interest Expense (Note 4) | 39
Lease Payments | (109)
Exchange Rate Movements and Other | 7
As at March 31, 2024 | 2,599
Less: Current Portion | 299
Long-Term Portion | 2,300

12. DEBT AND CAPITAL STRUCTURE

A) Short-Term Borrowings

|  |  | March 31, |  | December 31,
As at | Notes |  | 2024 |  | 2023
Uncommitted Demand Facilities | i |  | — |  | —
WRB Uncommitted Demand Facilities | ii |  | — |  | 179
Total Debt Principal |  |  | — |  | 179

i) Uncommitted Demand Facilities
As at March 31, 2024, the Company had uncommitted demand facilities of $1.7 billion (December 31, 2023 – $1.7 billion) in place, of which $1.4 billion may be drawn for general purposes, or the full amount may be available to issue letters of credit. As at March 31, 2024, there were outstanding letters of credit aggregating to $308 million (December 31, 2023 – $364 million) and no direct borrowings.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 16

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
ii) WRB Uncommitted Demand Facilities
WRB has uncommitted demand facilities of US$450 million that may be used to cover short-term working capital requirements, of which Cenovus’s proportionate share is 50 percent. As at March 31, 2024, Cenovus’s proportionate share drawn on these facilities was $nil. As at December 31, 2023, Cenovus’s proportionate share of the capacity was US$225 million and US$135 million (C$179 million) of this capacity was drawn.
B) Long-Term Debt

|  |  | March 31, |  | December 31,
As at |  |  | 2024 |  | 2023
Committed Credit Facility (1) |  |  | — |  | —
U.S. Dollar Denominated Unsecured Notes |  |  | 5,151 |  | 5,028
Canadian Dollar Unsecured Notes |  |  | 2,000 |  | 2,000
Total Debt Principal |  |  | 7,151 |  | 7,028
Debt Premiums (Discounts), Net, and Transaction Costs |  |  | 76 |  | 80
Long-Term Debt |  |  | 7,227 |  | 7,108

(1) The committed credit facility may include Bankers’ Acceptances, secured overnight financing rate loans, prime rate loans and U.S. base rate loans.
As at March 31, 2024, the Company had in place a committed credit facility that consists of a $1.8 billion tranche maturing on November 10, 2025, and a $3.7 billion tranche maturing on November 10, 2026. As at March 31, 2024, no amount was drawn on the credit facility (December 31, 2023 – $nil).
As at March 31, 2024, the Company was in compliance with all of the terms of its debt agreements. Under the terms of Cenovus’s committed credit facility, the Company is required to maintain a total debt to capitalization ratio, as defined in the agreement, not to exceed 65 percent. The Company is below this limit.
C) Capital Structure
Cenovus’s capital structure consists of shareholders’ equity plus Net Debt. Net Debt includes the Company’s short-term borrowings, and the current and long-term portions of long-term debt, net of cash and cash equivalents and short-term investments. Net Debt is used in managing the Company’s capital structure. The Company’s objectives when managing its capital structure are to maintain financial flexibility, preserve access to capital markets, ensure its ability to finance internally generated growth and to fund potential acquisitions while maintaining the ability to meet the Company’s financial obligations as they come due. To ensure financial resilience, Cenovus may, among other actions, adjust capital and operating spending, draw down on its credit facilities or repay existing debt, adjust dividends paid to shareholders, purchase the Company’s common shares or preferred shares for cancellation, issue new debt, or issue new shares.
Cenovus monitors its capital structure and financing requirements using, among other things, Total Debt, Net Debt to adjusted earnings before interest, taxes and depreciation, depletion and amortization (“Adjusted EBITDA”), Net Debt to Adjusted Funds Flow and Net Debt to Capitalization. These measures are used to steward Cenovus’s overall debt position as measures of Cenovus’s overall financial strength.
Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times and Net Debt at or below $4.0 billion over the long-term at a West Texas Intermediate (“WTI”) price of US$45.00 per barrel. These measures may fluctuate periodically outside this range due to factors such as persistently high or low commodity prices.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 17

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
Net Debt to Adjusted EBITDA

| March 31, |  | December 31,
As at | 2024 |  | 2023
Short-Term Borrowings | — |  | 179
Current Portion of Long-Term Debt | — |  | —
Long-Term Portion of Long-Term Debt | 7,227 |  | 7,108
Total Debt | 7,227 |  | 7,287
Less: Cash and Cash Equivalents | (2,400) |  | (2,227)
Net Debt | 4,827 |  | 5,060
Net Earnings (Loss) | 4,649 |  | 4,109
Add (Deduct): |  |  |
Finance Costs, Net (1) | 512 |  | 538
Income Tax Expense (Recovery) | 1,352 |  | 931
Depreciation, Depletion and Amortization | 4,734 |  | 4,644
Exploration and Evaluation Asset Write-downs | 29 |  | 29
(Income) Loss From Equity-Accounted Affiliates | (54) |  | (51)
Unrealized (Gain) Loss on Risk Management | 113 |  | 52
Foreign Exchange (Gain) Loss, Net | 39 |  | (67)
(Gain) Loss on Divestiture of Assets (1) | (117) |  | 20
Re-measurement of Contingent Payments | 70 |  | 59
Other (Income) Loss, Net | (147) |  | (63)
Adjusted EBITDA (2) | 11,180 |  | 10,201
Net Debt to Adjusted EBITDA (times) | 0.4 |  | 0.5

(1)Revised presentation as of January 1, 2024. See Note 3.
(2)Calculated on a trailing twelve-month basis.
Net Debt to Adjusted Funds Flow

| March 31, |  | December 31,
As at | 2024 |  | 2023
Net Debt | 4,827 |  | 5,060
Cash From (Used in) Operating Activities | 9,599 |  | 7,388
(Add) Deduct: |  |  |
Settlement of Decommissioning Liabilities | (222) |  | (222)
Net Change in Non-Cash Working Capital | 171 |  | (1,193)
Adjusted Funds Flow (1) | 9,650 |  | 8,803
Net Debt to Adjusted Funds Flow (times) | 0.5 |  | 0.6

(1)Calculated on a trailing twelve-month basis.
Net Debt to Capitalization

| March 31, |  | December 31,
As at | 2024 |  | 2023
Net Debt | 4,827 |  | 5,060
Shareholders’ Equity | 29,731 |  | 28,698
Capitalization | 34,558 |  | 33,758
Net Debt to Capitalization (percent) | 14 |  |  | 15 |

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 18

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

13. CONTINGENT PAYMENTS

In connection with the transaction with BP Canada Energy Group ULC (“bp Canada”) to purchase the remaining 50 percent interest in Sunrise Oil Sands Partnership (“SOSP”), Cenovus agreed to make quarterly variable payments up to $600 million, from SOSP to bp Canada for up to eight quarters subsequent to August 31, 2022, when the average Western Canadian Select (“WCS”) price in a quarter exceeds $52.00 per barrel. The quarterly payment is calculated as $2.8 million plus the difference between the average WCS price less $53.00 multiplied by $2.8 million, for any of the eight quarters the average WCS price is equal to or greater than $52.00 per barrel. If the average WCS price is less than $52.00 per barrel, no payment will be made for that quarter. The maximum payment over the remaining term of the contract is $144 million.
The variable payment will be re-measured to fair value at each reporting date, with changes in fair value recorded to re-measurement of contingent payments.
For the three months ended March 31, 2024, $107 million was paid for the quarterly payment period ended November 30, 2023 (2023 – $92 million).

| Total
As at December 31, 2023 | 164
Liabilities Settled or Payable | (50)
Re-measurement | 28
As at March 31, 2024 | 142

14. DECOMMISSIONING LIABILITIES

| Total
As at December 31, 2023 | 4,155
Liabilities Incurred | 7
Liabilities Settled | (48)
Liabilities Disposed | (56)
Unwinding of Discount on Decommissioning Liabilities (Note 4) | 57
Exchange Rate Movements | 8
As at March 31, 2024 | 4,123

As at March 31, 2024, the undiscounted amount of estimated future cash flows required to settle the obligation was discounted using a credit-adjusted risk-free rate of 5.5 percent (December 31, 2023 – 5.5 percent) and assumes an inflation rate of two percent (December 31, 2023 – two percent).

15. OTHER LIABILITIES

| March 31, |  | December 31,
As at | 2024 |  | 2023
Renewable Volume Obligation, Net (1) | 455 |  | 397
Pension and Other Post-Employment Benefit Plan | 262 |  | 276
Provision for West White Rose Expansion Project | 141 |  | 156
Provisions for Onerous and Unfavourable Contracts | 66 |  | 72
Employee Long-Term Incentives | 67 |  | 100
Drilling Provisions | 4 |  | 25
Other | 161 |  | 157
| 1,156 |  | 1,183

(1)The gross amounts of the renewable volume obligation and renewable identification numbers asset were $496 million and $41 million, respectively (December 31, 2023 – $785 million and $388 million, respectively).

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 19

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

16. SHARE CAPITAL AND WARRANTS

A) Authorized
Cenovus is authorized to issue an unlimited number of common shares, and first and second preferred shares not exceeding, in aggregate, 20 percent of the number of issued and outstanding common shares. The first and second preferred shares may be issued in one or more series with rights and conditions to be determined by the Board of Directors prior to issuance and subject to the Company’s articles.
B) Issued and Outstanding – Common Shares

| March 31, 2024 |  | December 31, 2023
| Number of Common Shares (thousands) |  | Amount |  | Number of Common Shares (thousands) |  | Amount
Outstanding, Beginning of Year | 1,871,868 |  | 16,031 |  | 1,909,190 |  | 16,320
Issued Upon Exercise of Warrants | 300 |  | 3 |  | 2,610 |  | 26
Issued Under Stock Option Plans | 406 |  | 5 |  | 3,679 |  | 58
Purchase of Common Shares Under NCIB | (7,378) |  | (63) |  | (43,611) |  | (373)
Outstanding, End of Period | 1,865,196 |  | 15,976 |  | 1,871,868 |  | 16,031

As at March 31, 2024, there were 43.7 million (December 31, 2023 – 45.5 million) common shares available for future issuance under the stock option plan.
C) Normal Course Issuer Bid
On November 7, 2023, the Company received approval from the TSX to renew the Company’s NCIB program to purchase up to 133.2 million common shares from November 9, 2023, to November 8, 2024.
For the three months ended March 31, 2024, the Company purchased and cancelled 7.4 million common shares through the NCIB. The shares were purchased at a volume weighted average price of $22.30 per common share for a total of $165 million. Paid in surplus was reduced by $102 million, representing the excess of the purchase price of the common shares over their average carrying value.
From April 1, 2024, to April 26, 2024, the Company purchased an additional 8.6 million common shares for $250 million. As at April 26, 2024, the Company can further purchase up to 106.6 million common shares under the NCIB.
D) Issued and Outstanding – Preferred Shares
For the three months ended March 31, 2024, there were no preferred shares issued. As at March 31, 2024, there were 36 million preferred shares outstanding (December 31, 2023 – 36 million), with a carrying value of $519 million (December 31, 2023 – $519 million).

As at March 31, 2024 | Dividend Reset Date |  | Dividend Rate (percent) |  | Number of Preferred Shares (thousands)
Series 1 First Preferred Shares | March 31, 2026 |  | 2.58 |  |  | 10,740
Series 2 First Preferred Shares (1) | Quarterly |  | 6.71 |  |  | 1,260
Series 3 First Preferred Shares | December 31, 2024 |  | 4.69 |  |  | 10,000
Series 5 First Preferred Shares | March 31, 2025 |  | 4.59 |  |  | 8,000
Series 7 First Preferred Shares | June 30, 2025 |  | 3.94 |  |  | 6,000

(1) The floating-rate dividend was 6.77 percent from December 31, 2023, to March 30, 2024, and is 6.71 percent for the period from March 31, 2024, to June 29, 2024.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 20

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
E) Issued and Outstanding – Warrants

| March 31, 2024 |  | December 31, 2023
| Number of Warrants (thousands) |  | Amount |  | Number of Warrants (thousands) |  | Amount
Outstanding, Beginning of Year | 7,625 |  | 25 |  | 55,720 |  | 184
Exercised | (300) |  | (1) |  | (2,610) |  | (8)
Purchased and Cancelled | — |  | — |  | (45,485) |  | (151)
Outstanding, End of Period | 7,325 |  | 24 |  | 7,625 |  | 25

The exercise price of the warrants is $6.54 per share.

17. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

| Pension and Other Post-Employment Benefits |  | Private Equity Instruments |  | Foreign Currency Translation Adjustment |  | Total
As at December 31, 2022 | 99 |  | 29 |  | 1,342 |  | 1,470
Other Comprehensive Income (Loss), Before Tax | (4) |  | — |  | (31) |  | (35)
Reclassification on Divestiture | — |  | — |  | 12 |  | 12
Income Tax (Expense) Recovery | 1 |  | — |  | — |  | 1
As at March 31, 2023 | 96 |  | 29 |  | 1,323 |  | 1,448
As at December 31, 2023 | 55 |  | 85 |  | 1,068 |  | 1,208
Other Comprehensive Income (Loss), Before Tax | 18 |  | — |  | 268 |  | 286
Income Tax (Expense) Recovery | (4) |  | — |  | — |  | (4)
As at March 31, 2024 | 69 |  | 85 |  | 1,336 |  | 1,490

18. STOCK-BASED COMPENSATION PLANS

Cenovus has a number of stock-based compensation plans that include NSRs, Cenovus replacement stock options, performance share units (“PSUs”), restricted share units (“RSUs”) and deferred share units.
On February 26, 2024, Cenovus granted PSUs and RSUs to certain employees under its Performance Share Unit Plan for Local Employees in the Asia Pacific Region and Restricted Share Unit Plan for Local Employees in the Asia Pacific Region. The PSUs are time-vested whole-share units that entitle employees to receive a cash payment equal to the value of a Cenovus common share. The number of units eligible to vest is determined by a multiplier that ranges from zero percent to 200 percent and is based on the Company achieving key pre-determined performance measures. The RSUs are whole-share units and entitle employees to receive, upon vesting, a cash payment equal to the value of a Cenovus common share.
The following tables summarize information related to the Company’s stock-based compensation plans:

| Units Outstanding |  | Units Exercisable
As at March 31, 2024 | (thousands) |  | (thousands)
Stock Options With Associated Net Settlement Rights | 13,681 |  | 9,301 |
Cenovus Replacement Stock Options | 649 |  | 649 |
Performance Share Units | 7,481 |  | — |
Restricted Share Units | 8,224 |  | — |
Deferred Share Units | 1,732 |  | 1,732 |

The weighted average exercise price of NSRs and Cenovus replacement stock options outstanding as at March 31, 2024, were $15.34 and $3.54, respectively.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 21

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

| Units Granted |  | Units Vested and Exercised/ Paid Out
For the three months ended March 31, 2024 | (thousands) |  | (thousands)
Stock Options With Associated Net Settlement Rights | 2,183 |  | 397
Cenovus Replacement Stock Options | — |  | 312
Performance Share Units | 6,178 |  | 8,718
Restricted Share Units | 3,254 |  | 2,243
Deferred Share Units | 163 |  | 131

| Weighted Average Exercise Price |  | Units Exercised
For the three months ended March 31, 2024 | ($/unit) |  | (thousands)
Stock Options With Associated Net Settlement Rights Exercised for Net Cash Payment | 10.18 |  | 397
Cenovus Replacement Stock Options Exercised and Net Settled for Cash | 11.10 |  | 300
Cenovus Replacement Stock Options Exercised and Net Settled for Common Shares (1) | 8.56 |  | 12

(1)Cenovus replacement stock options were net settled for 9 thousand common shares.
The following table summarizes the stock-based compensation expense (recovery) recorded for all plans:

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Stock Options With Associated Net Settlement Rights |  |  |  |  | 4 |  | 4
Cenovus Replacement Stock Options |  |  |  |  | 3 |  | (6)
Performance Share Units |  |  |  |  | 48 |  | 9
Restricted Share Units |  |  |  |  | 35 |  | 11
Deferred Share Units |  |  |  |  | 11 |  | (2)
Stock-Based Compensation Expense (Recovery) |  |  |  |  | 101 |  | 16

19. RELATED PARTY TRANSACTIONS

A) Husky-CNOOC Madura Ltd.
The Company holds a 40 percent interest in the jointly controlled entity HCML. The Company’s share of equity investment income (loss) related to the joint venture are recorded in (income) loss from equity-accounted affiliates.
For the three months ended March 31, 2024, the Company received $31 million of distributions from HCML (2023 – $23 million) and paid $nil in contributions (2023 – $11 million).
B) Husky Midstream Limited Partnership
The Company jointly owns and is the operator of HMLP. The Company holds a 35 percent interest in HMLP and applies the equity method of accounting. The Company’s share of equity investment income related to the joint venture, in excess of cumulated unrecognized losses, distributions received and contributions paid, is recorded in (income) loss from equity-accounted affiliates.
For the three months ended March 31, 2024 and 2023, the Company received no distributions from HMLP and paid no contributions.
For the three months ended March 31, 2024, the Company charged HMLP $31 million (2023 – $32 million) for construction costs and management services. For the three months ended March 31, 2024, the Company incurred costs of $69 million (2023 – $67 million), for the use of HMLP’s pipeline systems and transportation and storage services.
The carrying value of the Company’s investment in HMLP as at March 31, 2024, was $nil (December 31, 2023 – $nil) due to losses in excess of the equity investment. Cenovus had unrecognized cumulative losses from earnings and OCI, net of tax, of $30 million as at March 31, 2024 (December 31, 2023 – $31 million).

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 22

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

20. FINANCIAL INSTRUMENTS

Cenovus’s financial assets and financial liabilities consist of cash and cash equivalents, accounts receivable and accrued revenues, restricted cash, risk management assets and liabilities, accounts payable and accrued liabilities, short-term borrowings, lease liabilities, contingent payments, long-term debt and certain portions of other assets and other liabilities. Risk management assets and liabilities arise from the use of derivative financial instruments.
A) Fair Value of Non-Derivative Financial Instruments
The fair values of cash and cash equivalents, accounts receivable and accrued revenues, accounts payable and accrued liabilities, and short-term borrowings approximate their carrying amount due to the short-term maturity of these instruments.
The fair values of restricted cash, certain portions of other assets and other liabilities approximate their carrying amount due to the specific non-tradeable nature of these instruments.
Long-term debt is carried at amortized cost. The estimated fair value of long-term debt was determined based on period-end trading prices of long-term debt on the secondary market (Level 2). As at March 31, 2024, the carrying value of Cenovus’s long-term debt was $7.2 billion and the fair value was $6.7 billion (December 31, 2023, carrying value – $7.1 billion; fair value – $6.6 billion).
The Company classifies certain private equity investments as fair value through other comprehensive income (loss) (“FVOCI”) as they are not held for trading and fair value changes are not reflective of the Company’s operations. These assets are carried at fair value in other assets. Fair value is determined based on recent private placement transactions (Level 3) when available.
The following table provides a reconciliation of changes in the fair value of private equity investments classified as FVOCI:

| Total |  |
As at December 31, 2023 | 131 |  |
Changes in Fair Value | — |  |
As at March 31, 2024 | 131 |  |

B) Fair Value of Risk Management Assets and Liabilities
Risk management assets and liabilities are carried at fair value in accounts receivable and accrued revenues, accounts payable and accrued liabilities (for short-term positions), other assets and other liabilities (for long-term positions). Changes in fair value are recorded in (gain) loss on risk management.
The Company’s risk management assets and liabilities consist of crude oil, condensate, natural gas, and refined product futures, as well as renewable power, power and foreign exchange contracts. The Company may also enter into swaps, forwards, and options to manage commodity, foreign exchange and interest rate exposures.
Crude oil, natural gas, condensate, refined product and power contracts are recorded at their estimated fair value based on the difference between the contracted price and the period-end forward price for the same commodity, using quoted market prices or the period-end forward price for the same commodity extrapolated to the end of the term of the contract (Level 2). The fair value of foreign exchange rate contracts is calculated using external valuation models that incorporate observable market data and foreign exchange forward curves (Level 2).
The fair value of renewable power contracts are calculated using internal valuation models that incorporate broker pricing for relevant markets, some observable market prices and extrapolated market prices with inflation assumptions (Level 3). The fair value of renewable power contracts are calculated by Cenovus’s internal valuation team, which consists of individuals who are knowledgeable and have experience in fair value techniques.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 23

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
Summary of Risk Management Positions

| March 31, 2024 |  | December 31, 2023
| Risk Management |  | Risk Management
As at | Asset |  | Liability |  | Net |  | Asset |  | Liability |  | Net
Crude Oil, Natural Gas, Condensate and Refined Products | 11 |  | 19 |  | (8) |  | 11 |  | 19 |  | (8)
Power Contracts | 7 |  | 1 |  | 6 |  | 2 |  | — |  | 2
Renewable Power Contracts | — |  | 13 |  | (13) |  | 18 |  | — |  | 18
Foreign Exchange Rate Contracts | 1 |  | — |  | 1 |  | — |  | — |  | —
| 19 |  | 33 |  | (14) |  | 31 |  | 19 |  | 12

The following table presents the Company’s fair value hierarchy for risk management assets and liabilities carried at fair value:

| March 31, |  | December 31,
As at | 2024 |  | 2023
Level 2 – Prices Sourced From Observable Data or Market Corroboration | (1) |  | (6)
Level 3 – Prices Sourced From Partially Unobservable Data | (13) |  | 18
| (14) |  | 12

The following table provides a reconciliation of changes in the fair value of Cenovus’s risk management assets and liabilities:

| Total |  |
As at December 31, 2023 | 12 |  |
Change in Fair Value of Contracts in Place, Beginning of Year | 1 |  |
Change in Fair Value of Contracts Entered Into During the Period | (37) |  |
Fair Value of Contracts Realized During the Period | 10 |  |
As at March 31, 2024 | (14) |  |

C) Earnings Impact of (Gains) Losses From Risk Management Positions

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Realized (Gain) Loss |  |  |  |  | 10 |  | 24
Unrealized (Gain) Loss |  |  |  |  | 31 |  | (30)
(Gain) Loss on Risk Management |  |  |  |  | 41 |  | (6)

Realized and unrealized gains and losses on risk management are recorded in the reportable segment to which the derivative instrument relates.
D) Fair Value of Contingent Payments
The variable payment (Level 3) is carried at fair value. Fair value is estimated by calculating the present value of the expected future cash flows using an option pricing model, which assumes the probability distribution for WCS is based on the volatility of WTI options, volatility of Canadian-U.S. foreign exchange rate options and both WTI and WCS futures pricing that was discounted using a credit-adjusted risk-free rate. Fair value of the variable payment was calculated by Cenovus’s internal valuation team, which consists of individuals who are knowledgeable and have experience in fair value techniques. As at March 31, 2024, the fair value of the variable payment was estimated to be $142 million applying a credit-adjusted risk-free rate of 5.8 percent.
As at March 31, 2024, average WCS forward pricing for the remaining term of the variable payment is $91.98 per barrel. The average volatility of WTI options and the Canadian-U.S. foreign exchange rates was 31.6 percent and 4.8 percent, respectively. A sensitivity analysis for the following inputs to the option pricing model was performed, with fluctuations in all other variables held constant, and found to have a nominal impact on earnings before income tax:
•A $10.00 per barrel increase or decrease in WCS forward prices.
•A 10 percent increase or decrease in WTI option volatility.
•A five percent increase or decrease in Canadian to U.S. dollar foreign exchange rate option volatility.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 24

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

21. RISK MANAGEMENT

Cenovus is exposed to financial risks, including market risk related to commodity prices, foreign exchange rates, interest rates, commo dity power prices as w ell as credit risk and liquidity risk.
As at March 31, 2024, the fair value of risk management positions was a net liability of $14 million. As at March 31, 2024, there were foreign exchange contracts with a notional value of US$150 million (December 31, 2023 –$nil) and no interest rate contracts or cross currency interest rate swap contracts outstanding (December 31, 2023 – $nil).
Net Fair Value of Risk Management Positions

As at March 31, 2024 | Notional Volumes (1) (2) |  | Terms (3) |  | Weighted Average Price (2) |  | Fair Value Asset (Liability)
Futures Contracts Related to Blending (4) |  |  |  |  |  |  |
WTI Fixed – Sell | 3.9 MMbbls |  | April 2024 - June 2025 |  | US$77.55/bbl |  | (25)
WTI Fixed – Buy | 2.4 MMbbls |  | April 2024 - June 2025 |  | US$76.61/bbl |  | 14
Power Contracts |  |  |  |  |  |  | 6
Renewable Power Contracts |  |  |  |  |  |  | (13)
Other Financial Positions (5) |  |  |  |  |  |  | 3
Foreign Exchange Rate Contracts |  |  |  |  |  |  | 1
Total Fair Value |  |  |  |  |  |  | (14)

(1) Million barrels (“MMbbls”).
(2) Notional volumes and weighted average price are based on multiple contracts of varying amounts and terms over the respective time period; therefore, the notional volumes and weighted average price may fluctuate from month to month.
(3) Includes individual contracts with varying terms, the longest of which is 15 months.
(4) WTI futures contracts are used to help manage price exposure to condensate used for blending.
(5) Includes risk management positions related to WCS, heavy oil differentials, light oil differentials and condensate differentials, Belvieu fixed price contracts, reformulated blendstock for oxygenate blending gasoline contracts, heating oil and natural gas fixed price contracts and the Company’s U.S. refining and marketing activities.
A) Commodity Price and Foreign Exchange Rate Risk
Sensitivities
The following table summarizes the sensitivity of the fair value of Cenovus’s risk management positions to independent fluctuations in commodity prices and foreign exchange rates, with all other variables held constant. Management believes the fluctuations identified in the table below are a reasonable measure of volatility.
The impact of fluctuating commodity prices and foreign exchange rates on the Company’s open risk management positions could have resulted in an unrealized gain (loss) impacting earnings before income tax as follows:

As at March 31, 2024 | Sensitivity Range | Increase |  | Decrease
Crude Oil Commodity Price | ± US$10.00/bbl Applied to WTI, Condensate and Related Hedges | — |  | —
WCS and Condensate Differential Price | ± US$2.50/bbl Applied to Differential Hedges Tied to Production | (9) |  | 9
WCS (Hardisty) Differential Price | ± US$5.00/bbl Applied to WCS Differential Hedges Tied to Production | (12) |  | 12
Refined Products Commodity Price | ± US$10.00/bbl Applied to Heating Oil and Gasoline Hedges | (5) |  | 5
Natural Gas Commodity Price | ± US$1.00/Mcf (1) Applied to Natural Gas Hedges Tied to Production | — |  | —
Power Commodity Price | ± C$20.00/MWh (2) Applied to Power Hedges | 81 |  | (81)
U.S. to Canadian Dollar Exchange Rate | ± $0.05 in the U.S. to Canadian Dollar Exchange Rate | 13 |  | (15)

(1)One thousand cubic feet (“Mcf”).
(2)One thousand kilowatts of electricity per hour (“MWh”).
B) Credit Risk
Credit risk arises from the potential that the Company may incur a financial loss if a counterparty to a financial instrument fails to meet its financial or performance obligations in accordance with agreed terms. Cenovus assesses the credit risk of new counterparties and continues risk-based monitoring of all counterparties on an ongoing basis. A substantial portion of Cenovus’s accounts receivable are with customers in the oil and gas industry and are subject to normal industry credit risks.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 25

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
As at March 31, 2024, approximately 80 percent (December 31, 2023 – 83 percent) of the Company’s accounts receivable and accrued revenues were with investment grade counterparties, and 98 percent of the Company’s accounts receivable were outstanding for less than 60 days. The associated average expected credit loss on these accounts was 0.4 percent as at March 31, 2024 (December 31, 2023 – 0.4 percent).
C) Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet all of its financial obligations as they become due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price.
As disclosed in Note 12, over the long term, Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times over the long-term at a WTI price of US$45.00 per barrel, to manage the Company’s overall debt position.
Undiscounted cash outflows relating to financial liabilities are:

As at March 31, 2024 | Less than 1 Year |  | Years 2 and 3 |  | Years 4 and 5 |  | Thereafter |  | Total
Accounts Payable and Accrued Liabilities (1) | 5,811 |  | — |  | — |  | — |  | 5,811
Contingent Payments | 144 |  | — |  | — |  | — |  | 144
Lease Liabilities (2) | 442 |  | 697 |  | 566 |  | 2,572 |  | 4,277
Long-Term Debt (2) | 319 |  | 1,554 |  | 2,244 |  | 7,279 |  | 11,396

(1)Includes current risk management liabilities.
(2)Principal and interest, including current portion, if applicable.

22. SUPPLEMENTARY CASH FLOW INFORMATION

A) Working Capital

| March 31, |  | December 31,
As at | 2024 |  | 2023
Total Current Assets | 10,838 |  | 9,708
Total Current Liabilities | 6,365 |  | 6,210
Working Capital | 4,473 |  | 3,498

As at March 31, 2024, adjusted working capital, which excludes the contingent payments, was $4.6 billion (December 31, 2023 – $3.7 billion).
Changes in non-cash working capital are as follows:

For the three months ended March 31, |  |  |  |  | 2024 |  | 2023
Accounts Receivable and Accrued Revenues |  |  |  |  | (689) |  | 65
Income Tax Receivable |  |  |  |  | 216 |  | (137)
Inventories |  |  |  |  | (241) |  | 245
Accounts Payable and Accrued Liabilities |  |  |  |  | 316 |  | (850)
Income Tax Payable |  |  |  |  | 28 |  | (1,140)
Total Change in Non-Cash Working Capital |  |  |  |  | (370) |  | (1,817)
Net Change in Non-Cash Working Capital – Operating Activities |  |  |  |  | (269) |  | (1,633)
Net Change in Non-Cash Working Capital – Investing Activities |  |  |  |  | (101) |  | (184)
Total Change in Non-Cash Working Capital |  |  |  |  | (370) |  | (1,817)

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 26

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
B) Reconciliation of Liabilities
The following table provides a reconciliation of liabilities to cash flows arising from financing activities:

| Dividends Payable |  |  |  | Short-Term Borrowings |  | Long-Term Debt |  | Lease Liabilities
As at December 31, 2022 | 9 |  |  |  | 115 |  | 8,691 |  | 2,836
Changes From Financing Cash Flows: |  |  |  |  |  |  |  |  |
Net Issuance (Repayment) of Short-Term Borrowings | — |  |  |  | (115) |  | — |  | —
Principal Repayment of Leases | — |  |  |  | — |  | — |  | (70)
Base Dividends Paid on Common Shares | (200) |  |  |  | — |  | — |  | —
Dividends Paid on Preferred Shares | (18) |  |  |  | — |  | — |  | —
Non-Cash Changes: |  |  |  |  |  |  |  |  |
Finance and Transaction Costs | — |  |  |  | — |  | (5) |  | —
Lease Acquisitions | — |  |  |  | — |  | — |  | 33
Lease Additions | — |  |  |  | — |  | — |  | 8
Base Dividends Declared on Common Shares | 200 |  |  |  | — |  | — |  | —
Dividends Declared on Preferred Shares | 9 |  |  |  | — |  | — |  | —
Exchange Rate Movements and Other | — |  |  |  | — |  | (5) |  | 8
As at March 31, 2023 | — |  |  |  | — |  | 8,681 |  | 2,815
As at December 31, 2023 | 9 |  |  |  | 179 |  | 7,108 |  | 2,658
Changes From Financing Cash Flows: |  |  |  |  |  |  |  |  |
Net Issuance (Repayment) of Short-Term Borrowings | — |  |  |  | (175) |  | — |  | —
Principal Repayment of Leases | — |  |  |  | — |  | — |  | (70)
Base Dividends Paid on Common Shares | (262) |  |  |  | — |  | — |  | —
Dividends Paid on Preferred Shares | (9) |  |  |  | — |  | — |  | —
Non-Cash Changes: |  |  |  |  |  |  |  |  |
Finance and Transaction Costs | — |  |  |  | — |  | (4) |  | —
Lease Additions | — |  |  |  | — |  | — |  | 4
Base Dividends Declared on Common Shares | 262 |  |  |  | — |  | — |  | —
Dividends Declared on Preferred Shares | 9 |  |  |  | — |  | — |  | —
Exchange Rate Movements and Other | — |  |  |  | (4) |  | 123 |  | 7
As at March 31, 2024 | 9 |  |  |  | — |  | 7,227 |  | 2,599

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 27

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024

23. COMMITMENTS AND CONTINGENCIES

A) Commitments
Cenovus has entered into various commitments in the normal course of operations. Commitments that have original maturities less than one year are excluded from the table below. Future payments for the Company’s commitments are below:

As at March 31, 2024 | Remainder of Year |  | 2 Years |  | 3 Years |  | 4 Years |  | 5 Years |  | Thereafter |  | Total
Transportation and Storage (1) (2) | 1,613 |  | 2,021 |  | 1,816 |  | 1,795 |  | 1,787 |  | 16,016 |  | 25,048
Product Purchases | 380 |  | — |  | — |  | — |  | — |  | — |  | 380
Real Estate | 43 |  | 58 |  | 60 |  | 63 |  | 58 |  | 605 |  | 887
Obligation to Fund HCML | 73 |  | 97 |  | 96 |  | 91 |  | 53 |  | 92 |  | 502
Other Long-Term Commitments | 419 |  | 195 |  | 179 |  | 162 |  | 154 |  | 728 |  | 1,837
Total Commitments | 2,528 |  | 2,371 |  | 2,151 |  | 2,111 |  | 2,052 |  | 17,441 |  | 28,654

(1)Includes transportation commitments that are subject to regulatory approval or were approved, but are not yet in service of $13.6 billion. Terms are up to 20 years on commencement. Certain estimated tolls are subject to change pending review by the Canada Energy Regulator.
(2)As at March 31, 2024, includes $2.0 billion related to transportation and storage commitments with HMLP.
There were outstanding letters of credit aggregating to $308 million (December 31, 2023 – $364 million) issued as security for financial and performance conditions under certain contracts.
B) Contingencies
Legal Proceedings
Cenovus is involved in a limited number of legal claims associated with the normal course of operations. Cenovus believes that any liabilities that might arise from such matters, to the extent not provided for, are not likely to have a material effect on its interim Consolidated Financial Statements.
Income Tax Matters
The tax regulations and legislation and interpretations thereof in the various jurisdictions in which Cenovus operates are continually changing. As a result, there are usually a number of tax matters under review. Management believes that the provision for taxes is adequate.

24. PRIOR PERIOD REVISIONS

Certain comparative information presented in the Consolidated Statements of Comprehensive Income (Loss) and segment disclosures was revised for classification changes.
In September 2023, the Company made adjustments to ensure the consistent treatment of sales between segments and to correct the elimination of these transactions on consolidation. The following adjustments were made:
•Report Conventional segment sales between segments on a gross basis, which resulted in a reclassification between gross sales and transportation and blending expense.
•Report sales of feedstock between the Oil Sands, Conventional and U.S. Refining segments on a net basis, which resulted in a reclassification between gross sales and purchased product.
Offsetting adjustments were made to the Corporate and Eliminations segment. The above items had no impact to net earnings (loss), operating margin, segment income (loss), cash flows or financial position.
It was also identified that the elimination of sales of diluent, natural gas and associated transportation costs between segments were recorded to the incorrect line item in the Corporate and Eliminations segment. The adjustment resulted in an understatement of operating expense, overstatement of purchased product and an overstatement of transportation and blending expense on the Consolidated Statements of Comprehensive Income (Loss). There was no impact to net earnings (loss), operating margin, segment income (loss), cash flows or financial position.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 28

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the period ended March 31, 2024
The following table reconciles the amounts previously reported in the Consolidated Statements of Comprehensive Income (Loss) and segmented disclosures to the corresponding revised amounts:

| Three Months Ended March 31, 2023 |  |
Oil Sands Segment | Previously Reported |  | Revisions |  | Revised Balance |  |  |  |  |  |
Gross Sales | 5,911 |  |  | (204) |  |  | 5,707 |  |  |  |  |  |
Purchased Product | 559 |  |  | (204) |  |  | 355 |  |  |  |  |  |  |
| 5,352 |  |  | — |  |  | 5,352 |  |  |  |  |  |  |

Conventional Segment |  |  |  |  |  |  |  |
Gross Sales | 1,031 |  |  | 6 |  |  | 1,037 |  |  |  |  |  |
Purchased Product | 510 |  |  | (27) |  |  | 483 |  |  |  |  |  |  |
Transportation and Blending | 48 |  |  | 33 |  |  | 81 |  |  |  |  |  |  |
| 473 |  |  | — |  |  | 473 |  |  |  |  |  |  |

U.S. Refining Segment |  |  |  |  |  |  |  |
Gross Sales | 5,860 |  |  | (231) |  |  | 5,629 |  |  |  |  |  |  |
Purchased Product | 5,129 |  |  | (231) |  |  | 4,898 |  |  |  |  |  |  |
| 731 |  | — |  | 731 |  |  |  |  |  |

Corporate and Eliminations Segment |  |  |  |  |  |  |  |
Gross Sales | (1,925) |  |  | 429 |  |  | (1,496) |  |  |  |  |  |  |
Purchased Product | (1,499) |  |  | 479 |  |  | (1,020) |  |  |  |  |  |  |
Transportation and Blending | (141) |  |  | (134) |  |  | (275) |  |  |  |  |  |  |
Operating | (231) |  |  | 84 |  |  | (147) |  |  |  |  |  |  |
| (54) |  | — |  | (54) |  |  |  |  |  |

Consolidated |  |  |  |  |  |  |  |
Purchased Product | 5,792 |  |  | 17 |  |  | 5,809 |  |  |  |  |  |  |
Transportation and Blending | 2,853 |  |  | (101) |  |  | 2,752 |  |  |  |  |  |  |
Purchased Product, Transportation and Blending (1) | 8,645 |  |  | (84) |  |  | 8,561 |  |  |  |  |  |  |
Operating | 1,552 |  |  | 84 |  |  | 1,636 |  |  |  |  |  |  |
| 10,197 |  | — |  | 10,197 |  |  |  |  |  |

(1)Revised presentation as of January 1, 2024. See Note 3.

Cenovus Energy Inc. – Q1 2024 Interim Consolidated Financial Statements | 29