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Description of Business and Segmented Disclosures | 12 Months Ended
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Dec. 31, 2023
Disclosure Of Reportable Segments [Abstract] |
DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES |
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 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. The Company renamed its Canadian Manufacturing segment to Canadian Refining in 2023. •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 (jointly owned 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. A) Results of Operations – Segment and Operational Information
|  | Upstream
For the years ended December 31, |  | Oil Sands |  |  | Conventional |  |  | Offshore |  |  | Total
| 2023 |  |  |  | 2022 |  |  |  |  |  |  | 2023 |  |  |  | 2022 |  |  |  |  |  |  | 2023 |  |  |  | 2022 |  |  |  |  |  |  | 2023 |  |  |  | 2022 |  |  |  |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross Sales (1) |  | 26,192 |  |  |  |  | 34,683 |  |  |  |  |  |  | 3,273 |  |  |  |  | 4,439 |  |  |  |  |  |  | 1,617 |  |  |  |  | 2,020 |  |  |  |  |  |  | 31,082 |  |  |  |  | 41,142 |  |  |  |
Less: Royalties |  | 3,059 |  |  |  |  | 4,493 |  |  |  |  |  |  | 112 |  |  |  |  | 298 |  |  |  |  |  |  | 99 |  |  |  |  | 77 |  |  |  |  |  |  | 3,270 |  |  |  |  | 4,868 |  |  |  |
|  | 23,133 |  |  |  |  | 30,190 |  |  |  |  |  |  | 3,161 |  |  |  |  | 4,141 |  |  |  |  |  |  | 1,518 |  |  |  |  | 1,943 |  |  |  |  |  |  | 27,812 |  |  |  |  | 36,274 |  |  |  |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased Product (1) |  | 1,457 |  |  |  |  | 4,718 |  |  |  |  |  |  | 1,695 |  |  |  |  | 2,023 |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  |  |  | 3,152 |  |  |  |  | 6,741 |  |  |  |
Transportation and Blending (1) |  | 10,774 |  |  |  |  | 12,036 |  |  |  |  |  |  | 298 |  |  |  |  | 250 |  |  |  |  |  |  | 16 |  |  |  |  | 15 |  |  |  |  |  |  | 11,088 |  |  |  |  | 12,301 |  |  |  |
Operating |  | 2,716 |  |  |  |  | 2,930 |  |  |  |  |  |  | 590 |  |  |  |  | 541 |  |  |  |  |  |  | 384 |  |  |  |  | 318 |  |  |  |  |  |  | 3,690 |  |  |  |  | 3,789 |  |  |  |
Realized (Gain) Loss on Risk Management |  | 17 |  |  |  |  | 1,527 |  |  |  |  |  |  | (5) |  |  |  |  | 92 |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  |  |  | 12 |  |  |  |  | 1,619 |  |  |  |
Operating Margin |  | 8,169 |  |  |  |  | 8,979 |  |  |  |  |  |  | 583 |  |  |  |  | 1,235 |  |  |  |  |  |  | 1,118 |  |  |  |  | 1,610 |  |  |  |  |  |  | 9,870 |  |  |  |  | 11,824 |  |  |  |
Unrealized (Gain) Loss on Risk Management |  | 15 |  |  |  |  | (68) |  |  |  |  |  |  | (19) |  |  |  |  | 13 |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  |  |  | (4) |  |  |  |  | (55) |  |  |  |
Depreciation, Depletion and Amortization |  | 2,993 |  |  |  |  | 2,763 |  |  |  |  |  |  | 386 |  |  |  |  | 370 |  |  |  |  |  |  | 487 |  |  |  |  | 585 |  |  |  |  |  |  | 3,866 |  |  |  |  | 3,718 |  |  |  |
Exploration Expense |  | 19 |  |  |  |  | 9 |  |  |  |  |  |  | 6 |  |  |  |  | 1 |  |  |  |  |  |  | 17 |  |  |  |  | 91 |  |  |  |  |  |  | 42 |  |  |  |  | 101 |  |  |  |
(Income) Loss From Equity- Accounted Affiliates |  | 6 |  |  |  |  | 8 |  |  |  |  |  |  | — |  |  |  |  | — |  |  |  |  |  |  | (57) |  |  |  |  | (23) |  |  |  |  |  |  | (51) |  |  |  |  | (15) |  |  |  |
Segment Income (Loss) |  | 5,136 |  |  |  |  | 6,267 |  |  |  |  |  |  | 210 |  |  |  |  | 851 |  |  |  |  |  |  | 671 |  |  |  |  | 957 |  |  |  |  |  |  | 6,017 |  |  |  |  | 8,075 |  |  |  |
| Downstream
| Canadian Refining |  | U.S. Refining |  | Total
For the years ended December 31, | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross Sales (1) | 6,233 |  |  | 7,792 |  |  | 26,393 |  |  | 30,218 |  |  | 32,626 |  |  | 38,010 |
Less: Royalties | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| 6,233 |  |  | 7,792 |  |  | 26,393 |  |  | 30,218 |  |  | 32,626 |  |  | 38,010 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Purchased Product (1) | 4,919 |  |  | 6,389 |  |  | 23,354 |  |  | 26,020 |  |  | 28,273 |  |  | 32,409 |
Transportation and Blending | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Operating | 639 |  |  | 704 |  |  | 2,562 |  |  | 2,346 |  |  | 3,201 |  |  | 3,050 |
Realized (Gain) Loss on Risk Management | — |  |  | — |  |  | — |  |  | 112 |  |  | — |  |  | 112 |
Operating Margin | 675 |  |  | 699 |  |  | 477 |  |  | 1,740 |  |  | 1,152 |  |  | 2,439 |
Unrealized (Gain) Loss on Risk Management | — |  |  | — |  |  | (17) |  |  | 18 |  |  | (17) |  |  | 18 |
Depreciation, Depletion and Amortization | 185 |  |  | 208 |  |  | 486 |  |  | 640 |  |  | 671 |  |  | 848 |
Exploration Expense | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
(Income) Loss From Equity-Accounted Affiliates | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Segment Income (Loss) | 490 |  |  | 491 |  |  | 8 |  |  | 1,082 |  |  | 498 |  |  | 1,573 |
(1)Comparative periods reflect certain revisions. See Note 39.
| Corporate and Eliminations |  | Consolidated
For the years ended December 31, | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenues |  |  |  |  |  |  |  |  |  |  |
Gross Sales (1) | (8,234) |  |  | (7,387) |  |  | 55,474 |  |  | 71,765 |
Less: Royalties | — |  |  | — |  |  | 3,270 |  |  | 4,868 |
| (8,234) |  |  | (7,387) |  |  | 52,204 |  |  | 66,897 |
Expenses |  |  |  |  |  |  |  |  |  |  |
Purchased Product (1) | (6,710) |  |  | (5,192) |  |  | 24,715 |  |  | 33,958 |
Transportation and Blending (1) | (947) |  |  | (1,175) |  |  | 10,141 |  |  | 11,126 |
Operating (1) | (539) |  |  | (1,023) |  |  | 6,352 |  |  | 5,816 |
Realized (Gain) Loss on Risk Management | (3) |  |  | 31 |  |  | 9 |  |  | 1,762 |
Unrealized (Gain) Loss on Risk Management | 73 |  |  | (89) |  |  | 52 |  |  | (126) |
Depreciation, Depletion and Amortization | 107 |  |  | 113 |  |  | 4,644 |  |  | 4,679 |
Exploration Expense | — |  |  | — |  |  | 42 |  |  | 101 |
(Income) Loss From Equity-Accounted Affiliates | — |  |  | — |  |  | (51) |  |  | (15) |
Segment Income (Loss) | (215) |  |  | (52) |  |  | 6,300 |  |  | 9,596 |
General and Administrative | 688 |  |  | 865 |  |  | 688 |  |  | 865 |
Finance Costs | 671 |  |  | 820 |  |  | 671 |  |  | 820 |
Interest Income | (133) |  |  | (81) |  |  | (133) |  |  | (81) |
Integration, Transaction and Other Costs | 85 |  |  | 106 |  |  | 85 |  |  | 106 |
Foreign Exchange (Gain) Loss, Net | (67) |  |  | 343 |  |  | (67) |  |  | 343 |
Revaluation (Gain) Loss | 34 |  |  | (549) |  |  | 34 |  |  | (549) |
Re-measurement of Contingent Payment | 59 |  |  | 162 |  |  | 59 |  |  | 162 |
(Gain) Loss on Divestiture of Assets | (14) |  |  | (269) |  |  | (14) |  |  | (269) |
Other (Income) Loss, Net | (63) |  |  | (532) |  |  | (63) |  |  | (532) |
| 1,260 |  |  | 865 |  |  | 1,260 |  |  | 865 |
Earnings (Loss) Before Income Tax |  |  |  |  |  |  | 5,040 |  |  | 8,731 |
Income Tax Expense (Recovery) |  |  |  |  |  |  | 931 |  |  | 2,281 |
Net Earnings (Loss) |  |  |  |  |  |  | 4,109 |  |  | 6,450 |
(1)Comparative periods reflect certain revisions. See Note 39. B) Revenues by Product
For the years ended December 31, | 2023 |  | 2022 |  |  |  |
Upstream |  |  |  |  |  |  |
Oil Sands |  |  |  |  |  |  |
Crude Oil (1) | 22,550 |  | 28,921 |  |  |  |
NGLs (2) | 352 |  | 877 |  |  |  |
Natural Gas and Other | 231 |  | 392 |  |  |  |
Conventional |  |  |  |  |  |  |
Crude Oil | 589 |  | 429 |  |  |  |
NGLs (2) | 799 |  | 926 |  |  |  |
Natural Gas and Other (1) | 1,773 |  | 2,786 |  |  |  |
Offshore |  |  |  |  |  |  |
Crude Oil | 385 |  | 581 |  |  |  |
NGLs | 280 |  | 354 |  |  |  |
Natural Gas | 853 |  | 1,008 |  |  |  |
Total Upstream | 27,812 |  | 36,274 |  |  |  |
Downstream |  |  |  |  |  |  |
Canadian Refining |  |  |  |  |  |  |
Synthetic Crude Oil | 2,124 |  | 2,360 |  |  |  |
Diesel | 1,752 |  | 2,164 |  |  |  |
Asphalt | 571 |  | 620 |  |  |  |
Gasoline | 522 |  | 948 |  |  |  |
Other Products and Services | 1,264 |  | 1,700 |  |  |  |
U.S. Refining |  |  |  |  |  |  |
Gasoline | 12,375 |  | 14,116 |  |  |  |
Distillates | 9,612 |  | 11,453 |  |  |  |
Asphalt | 864 |  | 533 |  |  |  |
Other Products (1) | 3,542 |  | 4,116 |  |  |  |
Total Downstream | 32,626 |  | 38,010 |  |  |  |
Corporate and Eliminations (1) | (8,234) |  | (7,387) |  |  |  |
Consolidated | 52,204 |  | 66,897 |  |  |  |
(1)Comparative periods reflect certain revisions. See Note 39. (2)Third-party condensate sales are included within NGLs. C) Geographical Information
| Revenues (1) |  |  |  |
For the years ended December 31, | 2023 |  | 2022 |  |  |  |
Canada (2) | 25,128 |  | 33,314 |  |  |  |
United States (2) | 25,943 |  | 32,221 |  |  |  |
China | 1,133 |  | 1,362 |  |  |  |
Consolidated | 52,204 |  | 66,897 |  |  |  |
(1)Revenues by country are classified based on where the operations are located. (2)Comparative periods reflect certain revisions. See Note 39.
| Non-Current Assets (1)
As at December 31, | 2023 |  | 2022
Canada | 35,876 |  | 35,194
United States | 5,230 |  | 4,824
China | 1,608 |  | 2,064
Indonesia | 344 |  | 365
Consolidated | 43,058 |  | 42,447
(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, intangible assets and goodwill. Major Customers In connection with the marketing and sale of Cenovus’s own and purchased crude oil, NGLs, natural gas and refined products for the year ended December 31, 2023, Cenovus had two customers (2022 – two) that individually accounted for more than 10 percent of its consolidated gross sales. Sales to these customers, recognized as major international energy companies with investment grade credit ratings, were approximately $18.0 billion and $7.1 billion, respectively (2022 – $16.1 billion and $9.1 billion), and are reported across all of the Company’s operating segments D) Assets by Segment
| E&E Assets |  | PP&E |  | ROU Assets
As at December 31, | 2023 |  | 2022 |  | 2023 |  | 2022 |  | 2023 |  | 2022
Oil Sands | 729 |  | 674 |  | 24,443 |  | 24,657 |  | 849 |  | 638
Conventional | — |  | 6 |  | 2,209 |  | 2,020 |  | 1 |  | 2
Offshore | 9 |  | 5 |  | 2,798 |  | 2,549 |  | 102 |  | 152
Canadian Refining | — |  | — |  | 2,469 |  | 2,466 |  | 28 |  | 252
U.S. Refining | — |  | — |  | 5,014 |  | 4,482 |  | 268 |  | 329
Corporate and Eliminations | — |  | — |  | 317 |  | 325 |  | 432 |  | 472
Consolidated | 738 |  | 685 |  | 37,250 |  | 36,499 |  | 1,680 |  | 1,845
| Goodwill |  | Total Assets
As at December 31, | 2023 |  | 2022 |  | 2023 |  | 2022
Oil Sands | 2,923 |  | 2,923 |  | 31,673 |  | 32,248
Conventional | — |  | — |  | 2,429 |  | 2,410
Offshore | — |  | — |  | 3,511 |  | 3,339
Canadian Refining | — |  | — |  | 2,960 |  | 3,172
U.S. Refining | — |  | — |  | 8,660 |  | 8,324
Corporate and Eliminations | — |  | — |  | 4,682 |  | 6,376
Consolidated | 2,923 |  | 2,923 |  | 53,915 |  | 55,869
E) Capital Expenditures (1)
For the years ended December 31, | 2023 |  | 2022 |  |  |  |
Capital Investment |  |  |  |  |  |  |
Oil Sands | 2,382 |  | 1,792 |  |  |  |
Conventional | 452 |  | 344 |  |  |  |
Offshore |  |  |  |  |  |  |
Asia Pacific | 7 |  | 8 |  |  |  |
Atlantic | 635 |  | 302 |  |  |  |
Total Upstream | 3,476 |  | 2,446 |  |  |  |
Canadian Refining | 145 |  | 117 |  |  |  |
U.S. Refining | 602 |  | 1,059 |  |  |  |
Total Downstream | 747 |  | 1,176 |  |  |  |
Corporate and Eliminations | 75 |  | 86 |  |  |  |
| 4,298 |  | 3,708 |  |  |  |
Acquisitions (Note 5) |  |  |  |  |  |  |
Oil Sands (2) | 37 |  | 1,609 |  |  |  |
Conventional | 5 |  | 12 |  |  |  |
U.S. Refining (3) | 385 |  | — |  |  |  |
| 427 |  | 1,621 |  |  |  |
Total Capital Expenditures | 4,725 |  | 5,329 |  |  |  |
(1)Includes expenditures on PP&E, E&E assets and capitalized interest. Excludes capital expenditures related to the HCML joint venture. (2)In 2022, Cenovus was deemed to have disposed of its pre-existing interest in Sunrise Oil Sands Partnership (“SOSP”) and reacquired it at fair value as required by International Financial Reporting Standard 3, “Business Combinations” (“IFRS 3”). The acquisition capital above does not include the fair value of the pre-existing interest in SOSP of $1.6 billion. (3)In 2023, Cenovus was deemed to have disposed of its pre-existing interest in BP-Husky Refining LLC (“Toledo”) and reacquired it at fair value as required by IFRS 3. The acquisition capital above does not include the fair value of the pre-existing interest in Toledo of $368 million.

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