Analyst Note| Joe Gemino, CPA |
No-moat Cenovus Energy reported fourth-quarter results for its legacy business, which excludes the legacy Husky Energy operations. Cenovus reported adjusted funds flow from operations of CAD 341, which fell below our expectations and declined sequentially. The lower cash flow was a result of unfavorable downstream conditions and lower upstream operating netbacks. Despite the disappointing results, Cenovus was still able to generate positive adjusted free funds flow of CAD 99 million. The downstream segment generated a negative operating margin of CAD 73 million, which was driven by lower product demand and pricing. Refining throughput averaged 133 thousand barrels of oil equivalent per day, a substantial decrease from 191 mboe/d in the third quarter.