Cenovus Energy: 2Q26 Earnings Preview: Anticipating Solid Operations, But Financial Miss on Mark-to-Market and Lower Downstream Capture

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Cenovus Energy: 2Q26 Earnings Preview: Anticipating Solid Operations, But Financial Miss on Mark-to-Market and Lower Downstream Capture

Arun Jayaram AC North America Equity Research

(1-212) 622-8541 09 July 2026 J P M O R G A N

arun.jayaram@jpmchase.com

• 2Q26 expectations. We forecast 2Q26 EPS of C$1.46 and adjusted FFO of C

$4.21bn, which compares to current consensus estimates of C$1.68 and C$4.60bn,

respectively. Our forecasts are based on total production volumes of 964 MBoe/d at

C$1.19bn of capex in 2026, which compares to current consensus estimates of 965

MBoe/d at C$1.28bn of capex.

• Focused on strengthening the balance sheet. CVE remains laser focused on

strengthening the balance sheet in the near term, as 1Q26 saw only a modest QoQ

decline in net debt due to the C$1.1bn working-capital headwind that partially offset

higher adjusted funds flow. While the company’s capital allocation framework

intends to allocate 50% of its excess FCF to buybacks when net debt remains above

C$6bn, the management team had indicated a bias toward deleveraging in the near

term on the 1Q26 conference call. As such, we would not be surprised if the

company prioritizes strengthening the balance sheet in 2Q26 over shareholder

returns. We are modeling C$1.0bn of share repurchases in 2Q26 (~40% of excess

FCF), and forecast net debt to decline to ~C$5.9bn in 2Q26 (from ~C$8.1bn at the

end of 1Q26).

• Downstream update. CVE’s downstream segment delivered an upbeat 1Q26 print,

with Canadian refining throughput of 115 MBo/d at ~107% utilization and U.S.

refining throughput of 343 MBo/d at ~94% utilization, while adjusted market

capture reached 114% on the back of strong operating availability, heavy-crude

processing capability, and a market environment that favored the company’s low