Cenovus resuming Christina Lake oil sands expansion, boosts capex

Canada’s Cenovus Energy (TSX:CVE) has decided to resume the expansion of its Christina Lake oil sands project, in northeast Alberta, and to do so is boosting its 2017 budget by almost a quarter.

The Calgary-based oil producer said Thursday it would invest between $1.2 billion and $1.4 billion next year, adding that close to 70% of its 2017 budget will go towards sustaining its oil sands output, as well as base production at its other assets.

The remaining 30% will be allocated to growing its existing and emerging oil sands assets, Cenovus said.

Cenovus will restart construction of a 50,000-barrel-a-day expansion of its Christina Lake oil sands project in the first half of 2017.

The extension of Christina Lake, a 50-50 partnership with ConocoPhillips Co, was halted in 2014 as oil prices collapsed. But the company will restart construction of a 50,000-barrel-a-day expansion in the first half of 2017.

“With the tremendous progress we’ve made over the last two years in reducing operating costs and sustaining capital, we’re confident we can move forward with projects that have strong potential to drive shareholder value,” Brian Ferguson, Cenovus president and chief executive officer, said in the statement.

“As we resume investing in growth projects in the year ahead, Cenovus will continue to focus on maximizing cost efficiencies and maintaining financial resilience while delivering safe and reliable operations.”

The company also said it plans to increase its total oil production in 2017 by 14%, compared to its forecast average production for 2016.

The announcements come as oil prices are gaining strength following the Organization of Petroleum Exporting Countries (OPEC) decision to cut production from record levels, signalling relief from an oversupply that caused prices more than halve from highs in mid-2014.