A RESILIENT INTEGRATED ENERGY LEADER
Barrels of Oil Equivalent
Natural gas volumes are converted to barrels of oil equivalent (BOE) on the basis of six thousand cubic feet (Mcf) to one barrel (bbl). BOE may be misleading, particularly if used in isolation. A conversion ratio of one bbl to six Mcf is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent value equivalency at the wellhead.
Given that the value ratio based on the current price of crude oil compared with natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is not an accurate reflection of value.
Non-GAAP Measures and Additional Subtotal
This presentation contains references to adjusted funds flow and free funds flow, which are non-GAAP measures, and operating margin, which is an additional subtotal found in Note 1 of Cenovus’s Audited Consolidated Financial Statements for the year ended December 31, 2020 (available on SEDAR at sedar.com, on EDGAR at sec.gov and Cenovus’s website at cenovus.com).
These measures do not have a standardized meaning as prescribed by IFRS. Readers should not consider these measures in isolation or as a substitute for analysis of the company’s results as reported under IFRS. These measures are defined differently by different companies and therefore are not comparable to similar measures presented by other issuers. These measures are described and presented in order to provide shareholders and potential investors with additional measures for analyzing our ability to generate funds to finance our operations and information regarding our liquidity. This additional information should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. For definitions, as well as reconciliations to GAAP measures, and more information on these and other non-GAAP measures and additional subtotals have historically been reported by Cenovus, refer to “Non-GAAP Measures and Additional Subtotals” on page 1 of Cenovus’s MD&A for the period ended December 31, 2020 (available on SEDAR at sedar.com, on EDGAR at sec.gov and Cenovus’s website at
cenovus.com).
Advisory
• Reporting Segments - overview
• Operating margin and AFF definitions
• Supplemental - production
• Supplemental – upstream netbacks & forecasting
• Downstream disclosures
• Appendix
Table of contents
Financial reporting operating segment overview
Prior Segments
(for the year ended December 31, 2020)New Segments
(for the year ending December 31, 2021)Cenovus
Oil sands Foster Creek
Christina Lake Narrows Lake
Technology & Exploration
Conventional Deep Basin
Marten Hills
Downstream Wood River
Borger Corporate & Eliminations Corporate
Husky
Integrated Corridor Lloydminster Heavy Oil Value Chain Oil Sands
Western Canada US Refining
Canadian Refined Products
Offshore Asia Pacific
Atlantic
Corporate Corporate
Cenovus
Oil sands Foster Creek
Christina Lake Lloyd Thermal Cold/EOR Sunrise Tucker
Conventional Conventional
Offshore Atlantic
Asia Pacific Canadian Manufacturing Upgrader
Lloydminster Refinery US Manufacturing US refining
Retail Retail
Corporate & Eliminations Corporate
Financial reporting operating segment overview
Cenovus
Oil Sands Conventional Offshore Canadian
Manufacturing Corporate
Foster Creek Christina
Lake Sunrise
Tucker Thermals Cold /EOR
Asia
Pacific Atlantic China
Indonesia
Lloyd Upgrader
Lloyd Refinery
Lima
Toledo
Wood River Borger Superior Ethanol
U.S.
Manufacturing
Bruderheim
Retail
Upstream Downstream
Key financial metrics - Operating Margin & AFF
Operating Margin
Oil sands Conventional Offshore
Canadian Manufacturing U.S Manufacturing Retail
Total Operating Margin
• Operating Margin is defined as revenues less purchased product, transportation and blending, operating expenses, production and mineral taxes, inventory write-downs, net of reversals, plus realized gains less realized losses on risk
management activities; it excludes items within Corporate and Eliminations.
• Adjusted Funds Flow is defined as Cash From (Used in) Operating Activities excluding net change in non-cash working capital and the settlement of asset retirement obligations (ARO)
• This differs from the Funds from Operations (FFO) definition previously used by Husky
Adjusted & Free Funds Flow
Cash flow from Operating Activities (GAAP) Changes in non-cash working capital
Funds From Operations (Legacy Husky measure) Settlement of asset retirement obligations Adjusted Funds Flow
Less: Capital expenditures
Free Funds Flow
Supplemental detail - production
Oil Sands Foster Creek Christina Lake Sunrise
Lloydminster Thermals Tucker
Cold /EOR
Offshore China (NGLs) Indonesia (NGLs) Atlantic (Light Oil)
Conventional China
Indonesia
Total liquids Total natural gas
Upstream production volumes
Downstream throughput Canadian Manufacturing
Lloyd Upgrader Lloyd Refinery
U.S. Manufacturing Lima Refinery
Toledo Refinery Conventional
Crude Oil
Natural Gas Liquids
Retail
Upstream asset netback overview
Old netback/operating margin presentation
(for the year ended December 31, 2020)
New netback presentation
(for the year ending December 31, 2021)
Cenovus
Sales price Final realized sales price for dry bitumen from sales to third party customer
Royalties Royalty expense attributable to the asset Transportation and
blending Transportation expense related to the shipment of blend production on a dry bitumen basis, excluding the purchase price and transportation of diluent to site
Operating Inclusive of turnarounds and corporate costs related to the asset which are allocated directly to operating expense
Husky
Average price received Field gate price on a blend sales volume basis Optimization and
marketing Includes mark to market results from the company’s commodity trading activities Royalties Royalty expense attributable to the asset Purchase and
transportation costs Includes diluent purchase and transportation of blend sales
Operating Excludes turnarounds and corporate costs Selling, general & Corporate costs related to the asset and
Cenovus
Sales price ($/BOE) Final realized sales price for dry bitumen from sales to third party customer or upgrader / refinery gate
Royalties ($/BOE) Royalty expense attributable to the asset Transportation and
blending ($/BOE) Transportation expense related to the shipment of asset blend sales on a dry bitumen basis, excluding the purchase price and transportation of diluent to site
Operating ($/BOE) Inclusive of turnarounds and corporate costs related to the asset which are allocated directly to operating expense
Netback ($/BOE)
• New netback presentation consistent with legacy Cenovus approach
• Oil sands netbacks will be presented in dry bitumen barrels
vs. legacy Husky presentation on blended sales
Supplemental detail – upstream netbacks
Oil Sands Conventional Offshore
Foster Creek Christina
Lake Sunrise
Tucker Thermals Cold /EOR
Asia
Pacific Atlantic
China
Indonesia1
Upstream
• Foster Creek and Christina Lake will align with Cenovus prior period reporting
• Lloyd Thermal/Cold/Tucker will be reported as a combined netback due to the comingling of crude streams
• Lloyd Thermal/Cold/Tucker and Sunrise realized price and transportation expense will be based on Cenovus reporting framework
• Equity accounting treatment for Indonesia, HMGP (Husky Midstream General Partnership) and Headwater Exploration Inc.
• Capital associated with equity investments will be shown under “Investments in Joint Ventures”
($/bbl bitumen) ($/BOE)
($/BOE) ($/bbls)
Will be reported as a combined netback
($/BOE)
($/BOE)
Canadian Manufacturing disclosures
Canadian Manufacturing Upgrading
Upgrader throughput (Mbbls/d)
1Synthetic crude oil sales (Mbbls/d) Refining margin ($/bbl)
Unit operating expense ($/bbl) Lloydminster Asphalt Refinery
Lloydminster Refinery throughput (Mbbls/d) Refining margin ($/bbl)
Unit operating expense ($/bbl)
Refined product revenues
Diesel & Distillate Synthetic crude oil Asphalt
Other
Total refined product revenues ($ millions)
• Legacy HSE disclosure (pre-2020) may be helpful for asset level historical data for modelling the Canadian manufacturing segment
1) Upgrader throughput includes diluent returned to the field.
U.S. Manufacturing disclosures
U.S. Manufacturing
Refining margin ($/bbl)
Unit operating expense ($/bbl) Lima Refinery throughput (Mbbls/d) Superior Refinery throughput (Mbbls/d) WRB Refining throughput (Mbbls/d) Toledo Refinery throughput (Mbbls/d)
Refined Product Revenues
Gasoline
Diesel & Distillate Asphalt
Other
Total refined product revenues ($ millions)
• RINs purchases are included in U.S. Manufacturing purchased product expense
• U.S. Manufacturing will be reported on a first in – first out (FIFO) basis
Appendix
Accounting treatment overview
Prior Accounting treatment
(for the year ended December 31, 2020)
Current Accounting treatment
(for the year ending December 31, 2021)
Cenovus
Head office people and
rent costs General and administrative IT and workplace
enhancements Corporate capital Corporate costs
associated with assets Included within operating expense
Turnarounds Operating expense
Husky
Head office people and
rent costs Selling, general and administrative IT and workplace
enhancements Selling, general and administrative Corporate costs
associated with assets Separated from operating expense but included in operating margin
Turnarounds Capital investment
Cenovus
Head office people and
rent costs General and administrative IT, workplace
enhancements Corporate capital Corporate costs
associated with assets Included within operating expense
Turnarounds Operating expense
