CALGARY – Cenovus Energy Inc. has appointed a vice president of rail to its leadership team, as the major oilsands producer moves more of its crude by train.
The Calgary-based company (TSX:CVE) made its announcement as it posted a more than threefold increase in second-quarter profits and a 33 per cent jump in oilsands production.
Most oil producers say they’d prefer to ship their oil to market by pipeline, as it’s more efficient. But with environmental opposition clouding the outlook for pipelines, Cenovus and many of its peers have been increasingly turning to rail as an alternative — a controversial proposition, especially after last year’s deadly crash in Lac Megantic, Que.
Kent Avery has been tasked with overseeing Cenovus’ rail transport. As part of a broader effort to get more value out of the oil and gas it produces, Cenovus has also appointed Bob Pease as executive vice-president of markets, products and transportation.
The company completed eight unit train deliveries during the first half of the year. Unit trains consist of 100 or so rail cars carrying a single product. Cenovus says it’s on track to reach 30,000 barrels of rail loading capacity by the end of this year.
Cenovus brought in $615 million in net earnings during the quarter, or 81 cents per share. That’s up from $179 million, or 24 cents per share diluted, in the same quarter last year.
Operating earnings, which strip out the effects of one-time items, were $473 million, or 62 cents per share — up 85 per cent from a year earlier and handily beating the average analyst estimate of 49 cents per share, according to Thomson Reuters.
Cash flow was almost $1.2 billion versus $871 million year-over-year, up 37 per cent, as Cenovus said it benefited from increased oil production and higher commodity prices.
Cenovus is known for its steam-driven oilsands operations in northeastern Alberta.
The company’s oil sands production averaged almost 125,000 barrels per day net in the second quarter, up 33 per cent from a year earlier, primarily driven by its Christina Lake project in northern Alberta. At its Foster Creek oilsands project, the company has been working to circulate steam more effectively through the maturing reservoir.
Shares in the company were up nearly three per cent at $33.75 in late-morning trading on the Toronto Stock Exchange
Follow @LaurenKrugel on Twitter