McKenzie said 2025 upstream production averaged 834,000 barrels of oil equivalent per day (BOE/d), the highest annual level in the company’s history and up 3% from 2024 excluding the impact of the MEG acquisition. Cenovus also reduced total upstream non-fuel operating costs by about 4% year over year. In the downstream, the company’s refineries averaged 95% combined utilization across Canadian and U.S. segments, including a 59-day turnaround at Toledo that was completed 11 days ahead of schedule. Cenovus re ...

Financial Data and Key Metrics Changes - In Q4 2025, Cenovus generated approximately CAD 2.8 billion of operating margin and CAD 2.7 billion of adjusted funds flow [20] - Operating margin in the upstream was over CAD 2.6 billion, consistent with the prior quarter, despite declining benchmark oil prices [20] - Oil sands non-fuel operating costs decreased to CAD 839 per barrel in Q4, over CAD 1.25 lower than the prior quarter [20] Business Line Data and Key Metrics Changes - Upstream production reached 834,000 BOE per day in 2025, a 3% increase from 2024, excluding the MEG Energy acquisition [8] - Q4 upstream production was 918,000 BOE per day, with oil sands production at 727,000 BOE per day, both records for the company [11] - Downstream operating margin was CAD 149 million in Q4, despite inventory holding losses and turnaround expenses [21] Market Data and Key Metrics Changes - The Canadian refining business achieved a crude throughput of 113,000 barrels per day in Q4, with a utilization rate of about 105% [18] - U.S. refining delivered crude throughput of 353,000 barrels per day, approximately 97% utilization [18] - Adjusted market capture was around 95% in Q4, reflecting the ability to capitalize on market opportunities [19] Company Strategy and Development Direction - Cenovus aims to leverage synergies from the MEG Energy acquisition, targeting CAD 150 million of annual synergies in 2026 and 2027, and over CAD 400 million by the end of 2028 [13] - The company is focused on brownfield development and optimization rather than large-scale projects, with a capital spending ceiling close to CAD 5 billion [99] - Cenovus is actively evaluating egress options to mitigate exposure to WCS volatility, with a significant shift in the percentage of crude sold in Alberta [68][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential risks associated with WCS volatility, citing improved egress options and a strong balance sheet [66][70] - The company anticipates continued operational momentum into 2026 and beyond, supported by recent production records and successful project completions [11][12] - Management highlighted the importance of safety and operational excellence as foundational to the company's strategy [5][26] Other Important Information - Cenovus completed the acquisition of MEG Energy, adding over 100,000 barrels a day of production capacity [10] - The company sold its interest in the WRB Refining joint venture, gaining full operational control of its downstream business [10] - Cenovus recognized a current tax recovery of CAD 189 million in Q4, primarily due to the integration of MEG's business [24] Q&A Session Summary Question: What are the next steps for the Mac asset acquired? - Management indicated that corporate synergies have been quickly realized, with a focus on operational improvements and a redevelopment program starting soon [33][34] Question: Can you elaborate on the solvent enhanced oil recovery techniques? - The Spruce Lake project involves injecting condensate along with steam to lower SOR and drive higher production, with a budget of CAD 250 million [42][43] Question: What drove the significant increase in U.S. market capture in Q4? - The increase was attributed to reliability improvements, market opportunities due to supply disruptions, and seasonal product mix advantages [52][54] Question: How does Cenovus plan to balance capital allocation between growth and shareholder returns? - The company plans to use 50% of free cash flow for deleveraging until net debt reaches CAD 6 billion, with the remaining 50% returned to shareholders [72][76]

Financial Data and Key Metrics Changes - In Q4 2025, Cenovus generated approximately CAD 2.8 billion of operating margin and CAD 2.7 billion of adjusted funds flow, with upstream operating margin over CAD 2.6 billion, consistent with the prior quarter despite declining benchmark oil prices [20][21] - Oil sands non-fuel operating costs decreased to CAD 839 per barrel in Q4, over CAD 1.25 lower than the prior quarter due to higher production volumes and reduced maintenance activity [20] - Full-year capital spending reached CAD 4.9 billion, supporting sustaining activity and growth projects [23] Business Line Data and Key Metrics Changes - Upstream production in 2025 averaged 834,000 BOE per day, a 3% increase from 2024, excluding the MEG Energy acquisition [8] - In Q4, upstream production reached 918,000 BOE per day, with oil sands production at 727,000 BOE per day, both records for the company [11] - Downstream operating margin was CAD 149 million in Q4, despite inventory holding losses and turnaround expenses [21] Market Data and Key Metrics Changes - The Canadian refining business achieved a crude throughput of 113,000 barrels per day in Q4, with a utilization rate of about 105% [18] - U.S. refining delivered crude throughput of 353,000 barrels per day, approximately 97% utilization [18] - Adjusted market capture was around 95% in Q4, reflecting the ability to capitalize on market opportunities [19] Company Strategy and Development Direction - Cenovus aims to leverage synergies from the MEG Energy acquisition, targeting CAD 150 million in annual synergies in 2026 and 2027, and over CAD 400 million by the end of 2028 [13] - The company is focused on operational excellence and cost reduction, with plans to increase production to over 70,000 barrels per day at Sunrise by 2028 [15] - Cenovus is committed to maintaining a strong balance sheet while pursuing growth opportunities, with a focus on brownfield development and debottlenecking projects [97] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential volatility in WCS pricing, highlighting improved egress options and a strong balance sheet [66][69] - The company anticipates continued operational momentum into 2026, supported by recent production records and successful project completions [11][12] - Management emphasized the importance of safety and operational reliability as core values driving the company's performance [5] Other Important Information - Cenovus completed the acquisition of MEG Energy, adding over 100,000 barrels a day of production capacity and enhancing its heavy oil portfolio [10] - The company divested its interest in the WRB Refining joint venture, gaining full operational control of its downstream business [10] Q&A Session Summary Question: What are the next steps for the MEG assets? - Management indicated that they have quickly moved to capture corporate synergies and are focusing on operational improvements and redevelopment programs [33][34] Question: Can you elaborate on the solvent enhanced oil recovery techniques? - Management confirmed the initiation of a solvent project at Spruce Lake North, which is expected to enhance production and recovery rates [42][43] Question: What drove the significant increase in U.S. market capture? - The increase was attributed to reliability improvements, market opportunities due to supply disruptions, and effective commercial optimization strategies [51][52] Question: How does Cenovus plan to balance capital allocation between growth and shareholder returns? - Management stated that 50% of free cash flow will be used for deleveraging until net debt reaches CAD 6 billion, with the remaining 50% returned to shareholders [72][75]

Financial Data and Key Metrics Changes - In Q4 2025, Cenovus generated approximately CAD 2.8 billion in operating margin and CAD 2.7 billion in adjusted funds flow, with upstream operating margin exceeding CAD 2.6 billion, consistent with the prior quarter despite declining benchmark oil prices [19][20] - Oil sands non-fuel operating costs decreased to CAD 839 per barrel in Q4, over CAD 1.25 lower than the previous quarter due to higher production volumes and reduced maintenance activity [19] - Net debt at the end of Q4 was approximately CAD 8.3 billion, an increase of about CAD 3 billion due to the MEG transaction, partially offset by CAD 1.9 billion from the sale of WRB [23] Business Line Data and Key Metrics Changes - Upstream production reached 834,000 BOE per day in 2025, a 3% increase from 2024, excluding the MEG Energy acquisition [6] - In Q4, upstream production was 918,000 BOE per day, with oil sands production at 727,000 BOE per day, both records for the company [10] - Downstream operating margin was CAD 149 million in Q4, despite challenges in regional crack spreads, with adjusted market capture around 95% [20][18] Market Data and Key Metrics Changes - The Canadian refining business achieved a crude throughput of 113,000 barrels per day in Q4, with a utilization rate of about 105% [17] - U.S. refining delivered crude throughput of 353,000 barrels per day, approximately 97% utilization [17] - The company expects to maintain adjusted market capture around 70% at a $14 WCS heavy oil differential, with opportunities for improvement [20][53] Company Strategy and Development Direction - Cenovus aims to leverage synergies from the MEG acquisition, targeting CAD 150 million in annual synergies in 2026 and 2027, and over CAD 400 million by the end of 2028 [12] - The company is focused on operational excellence and cost reduction, with plans to increase production at Christina Lake to around 400,000 barrels per day [22] - Cenovus is actively evaluating egress options to mitigate exposure to WCS volatility, with a strong emphasis on maintaining a robust balance sheet [66][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate potential risks associated with WCS volatility, highlighting a significant reduction in crude sold in Alberta [68] - The company is optimistic about its operational momentum continuing into 2026 and beyond, supported by strong performance and strategic acquisitions [10][25] - Management emphasized the importance of safety and operational reliability as foundational elements of the company's strategy [4] Other Important Information - Cenovus completed two significant transactions in 2025, including the acquisition of MEG Energy and the sale of its interest in the WRB Refining joint venture, enhancing its control over downstream operations [9] - The company is progressing on major capital projects, including Narrows Lake, Foster Creek, and West White Rose, with a focus on optimizing production and reducing costs [22][96] Q&A Session Summary Question: What are the next steps for the MEG assets? - Management indicated that they have quickly moved to capture corporate synergies and are focusing on operational improvements and redevelopment programs to enhance production [33][34] Question: Can you elaborate on the solvent enhanced oil recovery techniques? - Management confirmed the initiation of a solvent project at Spruce Lake North, which is expected to improve production and recovery rates [41][42] Question: What drove the significant increase in U.S. market capture? - The increase was attributed to reliability improvements and market opportunities due to supply disruptions, allowing the company to optimize its product mix [51][52] Question: How does Cenovus plan to balance capital allocation between growth and shareholder returns? - The company plans to allocate 50% of free cash flow to deleveraging until net debt reaches CAD 6 billion, after which it will increase shareholder returns [72][75]

Group 1: Company Overview - Cenovus Energy Inc. is an integrated oil and natural gas company headquartered in Calgary, Alberta, founded in 2009, operating across upstream oil sands and conventional production, as well as downstream refining and upgrading assets [4] Group 2: Analyst Downgrade and Market Position - On January 20, JPMorgan analyst Arun Jayaram downgraded Cenovus Energy Inc. from Overweight to Neutral and reduced the price target to C$25 from C$29, citing evolving supply-side risks in crude markets and a more constructive outlook for downstream operations [1] - The downgrade reflects a broader reassessment of the integrated oil sector heading into 2026, with U.S.-based integrated majors appearing relatively more attractive than Canadian counterparts based on valuation metrics [1] Group 3: Production Guidance and Strategic Priorities - Cenovus' 2026 production guidance of 945,000 to 985,000 barrels of oil equivalent per day exceeded expectations, driven primarily by strength in its oil sands portfolio [3] - Projected capital expenditures are above consensus estimates but aligned with expectations when excluding capitalized turnaround activities [3] - Strategic priorities for 2026 include the startup of the West White Rose project, further oil sands output growth, integration of MEG Energy assets, and the Lima refinery turnaround [3] Group 4: Financial Management and Shareholder Returns - Management remains focused on balance sheet optimization and shareholder returns through debt reduction and share repurchases [3] - Operational catalysts and capital allocation initiatives suggest that Cenovus retains the capacity to generate resilient cash flows and enhance shareholder value over the medium term despite near-term sector headwinds [3]

Performance Overview - The Third Avenue Value Fund achieved a return of 7.47% for the three months ended December 31, 2025, outperforming the MSCI World Index at 3.12% and the MSCI World Value Index at 3.34% [3] - For the year-to-date period, the Fund returned 35.46%, significantly higher than the MSCI World Index and MSCI World Value Index, which returned 21.09% and 20.79%, respectively [3] - Annualized performance for the trailing three-year and five-year periods was 16.76% and 18.00%, respectively [3] Key Contributors to Performance - Warrior Met Coal was the largest contributor to the Fund's performance, followed by Lundin Mining and Capstone Copper [4] - Bank of Ireland and Horiba also made significant positive contributions during the quarter [4] - Warrior Met Coal began commercial-scale mining at its Blue Creek project ahead of schedule, positively impacting revenue and cash flow [5] European Holdings - The Fund's Western European holdings, including Bank of Ireland, Buzzi Spa, and BMW, contributed positively to performance [6] - A weaker U.S. dollar enhanced returns for euro-denominated investments, which comprise over 70% of the portfolio [6] Banking Sector Insights - Bank of Ireland and Deutsche Bank have improved their operating performance, leading to better valuations and increased returns on capital [7] - Deutsche Bank shares traded above book value for the first time since the global financial crisis, marking a significant milestone [8] Copper Market Dynamics - Lundin Mining and Capstone Copper were significant contributors to performance, driven by the indispensable nature of copper in modern economies [9] - The supply of copper has proven challenging to increase, leading to a looming supply gap as demand accelerates [13] Japanese Investments - The performance of Japanese investments was mixed, with Horiba contributing positively while JEOL detracted from performance [15] - Subaru performed well despite concerns over U.S. import tariffs, achieving a total return of 26.28% in 2025 [16] Energy Sector Performance - The Fund's oil and gas-related businesses did not perform well in 2025, with significant headwinds affecting offshore energy service sectors [21] - Delays in offshore projects and changes in spending by major producers created challenges for the sector [21] Resource Conversion Activities - The Fund engaged in robust resource conversion activities, including acquisitions and divestitures, to enhance shareholder value [27] - Harbour Energy executed several strategic transactions, significantly shifting its production base and improving its financial position [28] New Investments - The Fund initiated a position in T.S. Lines Ltd., a container shipping company focused on routes within the Asia-Pacific region, which is expected to benefit from growing trade activity [35] - T.S. Lines has a strong balance sheet and operates a younger fleet, positioning it well for future growth [37]

Group 1 - The article discusses the analysis of oil and gas companies, specifically focusing on Cenovus Energy and related firms, highlighting the search for undervalued names in the sector [1] - The author emphasizes the cyclical nature of the oil and gas industry, describing it as a boom-bust market that requires patience and experience for successful investment [2] - The investing group, Oil & Gas Value Research, aims to identify under-followed oil companies and out-of-favor midstream companies that present compelling investment opportunities [2] Group 2 - The article mentions that the final earnings report for fiscal year 2025 for Cenovus Energy is forthcoming, indicating a significant upcoming event for stakeholders [2] - The investing group includes an active chat room for discussions among oil and gas investors, facilitating the sharing of recent information and investment ideas [2]

Group 1 - The article discusses the analysis of oil and gas companies, specifically focusing on Cenovus Energy and related firms, highlighting the search for undervalued names in the sector [1] - The author emphasizes the cyclical nature of the oil and gas industry, describing it as a boom-bust market that requires patience and experience for successful investment [2] - The investing group, Oil & Gas Value Research, aims to identify under-followed oil companies and out-of-favor midstream companies that present compelling investment opportunities [2] Group 2 - The article mentions that the final earnings report for fiscal year 2025 for Cenovus Energy is forthcoming, indicating a focus on the company's financial performance [2] - The investing group includes an active chat room for Oil & Gas investors to discuss recent information and share investment ideas [2]

Group 1 - Cenovus Energy Inc. is considering divesting its conventional oil and gas assets in Alberta to reduce debt after its C$8.5 billion acquisition of MEG Energy [3][4] - The potential sale of these assets is expected to generate approximately C$3 billion ($2.17 billion) [3] - The company aims to strengthen its balance sheet, targeting a reduction of net debt from around C$10.7 billion to C$4 billion over time [4] Group 2 - Cenovus Energy's share price increased by 7.47% from January 22 to January 29, 2026, making it one of the top-performing energy stocks during that week [1] - The company plans to invest C$3.6 billion in its oil sands business in 2026, an increase from C$2.8 billion in the previous budget [4] - Cenovus Energy was recently listed among the 10 Best Natural Gas Stocks to Buy [5]

Core Viewpoint - Cenovus Energy Inc. is nearing its 52-week high of $18.75, closing at $17.68, with its stock performance driven by strong operational execution and production growth rather than just macroeconomic factors [1][2]. Group 1: Operational Performance - Cenovus has demonstrated strong operational execution, with visible production growth and a disciplined capital framework, making it a compelling story in the Canadian energy sector [2]. - The company has outperformed Canadian Natural Resources Limited and has shown an 18.1% increase in share price over the past year, compared to 9.2% for CNQ and 25.8% for Suncor Energy [3]. - Cenovus has beaten the Zacks Consensus Estimate in three of the last four quarters, achieving an average earnings surprise of 25.96% [6][7]. Group 2: Production Growth Outlook - Cenovus is positioned for significant production growth, with a portfolio of sanctioned projects expected to support production exceeding 1 million BOE/d by 2027-2028 without needing new approvals [9]. - Key projects contributing to this growth include the Christina Lake North expansion and the Sunrise optimization program, which are projected to add significant production by 2028 [10]. Group 3: Strategic Acquisition - The acquisition of MEG Energy is a strategic move that strengthens Cenovus' oil sands portfolio, adding approximately 110 Mbbls/d of low-cost production and expected to be accretive to funds flow in the first year [11]. - Management anticipates pre-tax synergies of $150 million in 2026, growing to over $400 million annually by 2028, primarily through operational efficiencies [12]. Group 4: Financial Discipline and Valuation - Cenovus is transitioning to a focus on volume ramp-ups and reliability, with capital spending projected between C$5 billion and C$5.3 billion, indicating a balanced approach to sustaining operations and pursuing high-return projects [14]. - The company currently trades at a trailing 12-month EV/EBITDA multiple of 5.55X, below the industry average of 6.14X, suggesting potential for multiple expansion as cash flow visibility improves [15]. Conclusion - As Cenovus approaches its 52-week high, the stock's rise is supported by steady production growth, improving cash flow, and a clear capital return plan, indicating an attractive valuation relative to peers [17][18].