Cenovus Energy: 2Q26: Overall In-Line Results; Significant Net Debt Reduction; Increased Production Guidance & Lowered Operating Costs; Maintain Overweight

Research evidence excerpt

Cenovus Energy: 2Q26: Overall In-Line Results; Significant Net Debt Reduction; Increased Production Guidance & Lowered Operating Costs; Maintain Overweight

Matthew Anavy, CFA AC North America Credit Research

(1-212) 834-3568 29 July 2026 J P M O R G A N

matthew.a.anavy@jpmorgan.com

to compress relative to peers and reiterate our Overweight recommendation. Risks to our

view include significantly higher or lower commodity prices, sustained wide WCS

differentials, or debt-funded M&A.

Positives

• Solid Revenue Growth and Margins Drive 2Q26 Performance: CVE had total

revenues of C$17.4bn in 2Q26, up from C$12.4bn in 1Q26, with upstream revenues of

C$12.6bn, an increase from C$9.4bn in 1Q26, while downstream revenues of C$8.2bn

increased from C$5.6bn in 1Q26. Operating margin was C$5.9bn compared to C$4.4bn

in 1Q26. Upstream operating margin was C$4.9bn, up from C$3.7bn in the prior quarter

on higher crude prices and strong cost discipline. Downstream operating margin was C

$953mm, up from C$734mm in the prior quarter, benefiting from higher crack spreads

and upgrading differentials. Downstream operating utilization was 95% with total

throughput of 451.5Mbbls/d.

• Raised FY26 Production on Unchanged Capex, Lowered Operating Costs:

Following the strong results in the quarter, the company raised FY26 production guidance

by 25 mboe/d to 970-1,010 mboe/d and lowered Oil Sands operating cost guidance by

~6% due to strong performance in Oil Sands and optimization of turnaround activity.

Capex guidance remains unchanged at C$5.0-C$5.3bn.

• Significant Progress on Debt Reductions: During 2Q, the company fully repaid the

remaining C$2.2bn outstanding term loan related to the MEG Energy acquisition. Net

debt decreased by C$2.7bn q/q to C$5.4bn (C$8.1bn 1Q26), achieving the company’s