Cenovus Energy Inc (CVE) 2011年年度報告「TSX」.pdf

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1、cenovus 2011 annual report CENOVUS2011 annual report to shareholdersunlock it add it build it generate it maximize it Printed in C 421 7 Avenue SW PO Box 766 Calgary,Alberta,Canada T2P 0M5A different Oil SAndS Building on the ads we created in 2010 that were focused on the value oil and natural gas

2、bring to our lives,we launched another ad in 2011.It featured our Foster Creek project,pictured here,and invited Canadians to see a different side to the oil sands.Our operations include oil sands projects in northern Alberta,which use specialized methods to drill and pump the oil to the surface,and

3、 established natural gas and oil production in Alberta and Saskatchewan.We also have 50 percent ownership in two U.S.refineries.Cenovus Energy is a Canadian oil company.We are committed to applying fresh,progressive thinking to safely and responsibly unlock energy resources the world needs.161cOrpOr

4、Ate And ShArehOlder infOrmAtiOn cenovus energy annual report 2011COrPOrATE And ShArEhOldEr infOrMATiOnCENOVUSCENOVUSExECutivE OffiCErsBrian C.fergusonpresident&chief executive officerJohn K.Brannanexecutive vice-president&chief operating officerHarbir s.Chhinaexecutive vice-president,oil sandsKerry

5、D.Dyteexecutive vice-president,general counsel&corporate secretaryJudy A.fairburnexecutive vice-president,environment&strategic planningsheila M.Mcintoshexecutive vice-president,communications&stakeholder relationsivor M.rusteexecutive vice-president&chief Financial officerDonald t.swystunexecutive

6、vice-president,refining,Marketing,transportation&DevelopmentHayward J.Wallsexecutive vice-president,organization&Workplace DevelopmentCEnOvus HEAD&rEgistErED OffiCEcenovus energy Inc.421 7 avenue sWpo Box 766calgary,alberta,canada t2p 0M5phone:BOArD Of DirECtOrsMichael A.grandin(3)(7)chair,calgary,a

7、lbertaralph s.Cunningham(2)(3)(5)Houston,texasPatrick D.Daniel(1)(2)(3)calgary,albertaian W.Delaney(2)(3)(5)toronto,ontarioBrian C.ferguson(6)calgary,albertavalerie A.A.nielsen(1)(3)(4)calgary,albertaCharles M.rampacek(3)(4)(5)Dallas,texasColin taylor(1)(2)(3)toronto,ontarioWayne g.thomson(3)(4)(5)c

8、algary,alberta(1)Member of the audit committee.(2)Member of the Human resources and compensation committee.(3)Member of the nominating and corporate governance committee.(4)Member of the reserves committee.(5)Member of the safety,environment and responsibility committee.(6)as an officer and a non-in

9、dependent director,Mr.Ferguson is not a member of any Board committees.(7)ex-officio non-voting member of all other Board committees.AnnuAl MEEtingshareholders are invited to attend the annual meeting to be held on Wednesday,april 25,2012 at 2 p.m.(calgary time)at telus convention centre,exhibition

10、Hall e,2nd Floor,north Building,136 8th avenue se,calgary,alberta.please see our management proxy circular available on our website,for additional information.trAnsfEr AgEnts&rEgistrArIn canada,cIBc Mellon trust company*In the united states,computershare.*canadian stock transfer company Inc.(cst)pur

11、chased the issuer services business and is currently operating in the name of cIBc Mellon trust company during a transitional period.Canadian stock transfer Company inc.p.o.Box 700,station BMontreal,Quebec H3B 3Kshareholder Inquiries by phone:1.866.332.8898(north america,english&French)or 1.416.682.

12、3862(outside north america)or by facsimile:1.888.249.6189 or 1.514.985.8843.sHArEHOlDEr ACCOunt MAttErsFor information regarding your shareholdings or to change your address,transfer shares,eliminate duplicate mailings,direct deposit of dividends etc.,please contact canadian stock transfer company I

13、nc.stOCK ExCHAngEscenovus common shares trade on the toronto stock exchange(tsX)and the new york stock exchange(nyse)under the symbol cve.AnnuAl infOrMAtiOn fOrM/fOrM 40-four annual Information Form is filed with the canadian securities administrators in canada on seDar at and with the u.s.securitie

14、s and exchange commission under the Multi-Jurisdictional Disclosure system as an annual report on Form 40-F on eDgar at www.sec.gov.nYsE COrPOrAtE gOvErnAnCE stAnDArDsas a canadian company listed on the nyse,we are not required to comply with most of the nyse corporate governance standards and inste

15、ad may comply with canadian corporate governance requirements.We are,however,required to disclose the significant differences between our corporate governance practices and those required to be followed by u.s.domestic companies under the nyse corporate governance standards.except as summarized on o

16、ur website,we are in compliance with the nyse corporate governance standards in all significant respects.invEstOr rElAtiOnsplease visit the Invest in us section of for investor information.investor inquiries should be directed to:orsusan greyDirector,Investor relations403.766.4751 Media inquiries sh

17、ould be directed to:403.766.7751media.relations orrhona DelFrariDirector,Media relations403.766.4740 COrpOratE INfOrmatIONSharEhOldEr INfOrmatIONDesigned and produced by Foundry communications unlocking adding building generating maximizingvalueWe are a Canadian oil company applying fresh,progressiv

18、e thinking:To safely and responsibly unlock energy resources the world needs thats our promise.To increase total shareholder return thats our goal.We have a top-quality resource that is expected to produce oil for generations,a solid strategy and a track record of strong results.As a team,were passi

19、onate about operational excellence,committed to finding better ways of doing things and respectful of the environment and the communities where we live and work.We are continuing to grow responsibly and create value for our shareholders.Building a strong foundation for continued growth was our focus

20、 in 2011.DRILLING IN THE OIL SANDS Our Christina Lake project,pictured here,is located in northern Alberta,about 120 kilometres south of Fort McMurray.Its one of our industry-leading oil sands projects where we use steam-assisted gravity drainage(SAGD)technology.Learn more about SAGD on page 22/23 f

21、oldout.We have a culture that fosters new ideas and new approaches,and a track record of developing innovative solutions that unlock previously inaccessible resources.These solutions add value to our business and improve our environmental performance.MAKING IMPROVEMENTS This SAGD well pad at our Fos

22、ter Creek project uses electric pumps underground in the wells to bring oil to the surface.Weve been able to improve the SAGD process by using these pumps instead of a natural gas lift system.These electric submersible pumps reduce our steam to oil ratio(the amount of steam used to produce a barrel

23、of oil),which means less water use,lower emissions and lower operating costs per barrel of oil recovered.unlocking value throughleading technologyReceived three patents for technologies(including our blowdown boiler technology)Submitted four trademark applicationsProgressed more than 140 technology

24、development projects unlocking value throughleading technology3patents4trademarks140+projectsadding value throughour dedicated peopleSHARING KNOWLEDGE We held an Innovation Summit for our people to share ideas and information,to inspire each other and to apply what they learned.The two-day event bro

25、ught employees and contractors together from all areas of the company to help drive improvements across our business.Our teams are enthusiastic and dedicated to improving every aspect of our business.We are experienced at turning ideas into action and committed to doing right by the environment and

26、the communities where we live and work.We are building a work environment that has the right people with the right attitude and the right skills,working in the right culture.adding value throughour dedicated peopleIncreased focus on employee development Updated employees via company-wide forumsHeld

27、inaugural Innovation SummitWelcomed 700 people to the company to help execute growth plansBuilding value througha solid strategyADVANCING PROJECTS Our oil sands projects are a key part of our growth strategy.We build them in phases so we can apply what we learn from one phase to the next.Our Foster

28、Creek project,pictured here,has five phases in operation,with three more under construction.Our strategy defines our focus for the next decade.It is centred on developing our top-quality oil resources,building on our track record of strong project execution,progressing our environmental performance,

29、expanding our markets and maintaining our financial strength all aimed at increasing total shareholder return.We are building on our success in a consistent,predictable and reliable way.See how we did in 2011(page 15).Building value througha solid strategyPlan to double NAV in the 2010 to 2015 timef

30、rameAnticipate growing to 500,000 barrels per day net by the end of 2021Expect to pay a strong and growing dividend over timeContinue to fund growth internally and maintain strong cash flow and a strong balance sheetNET ASSET VALUE (NAV)DIVIDENDOIL PRODUCTIONFINANCIAL STRENGTHgenerating value throug

31、hsmart resource developmentOPERATING RESPONSIBLY As a routine part of our operations we monitor environmental conditions.For example,we regularly test the bodies of water located near our oil sands projects.We take our commitment to smart resource development seriously.Our manufacturing approach to

32、developing oil sands resources allows us to improve efficiencies and reduce costs while maintaining our commitment to safe operations and environmental progress.Its this approach,combined with the exceptional quality of our oil sands reservoirs,that helps make Cenovus an industry leader.generating v

33、alue throughsmart resource developmentMaintained a best-in-class steam to oil ratio(SOR)of about 2.2Learn more(page 22/23 foldout)Achieved competitive proved finding and development costs of$5.95 per barrel of oil equivalentReduced injury rates by 15 percent while increasing hours worked across the

34、company by 40 percentmaximizing value throughour integrated approachINCREASING CAPACITY The recently completed coker at our Wood River Refinery in Illinois supports our integration strategy and growth plans.The coker and refinery expansion(CORE)doubles Wood Rivers heavy crude oil refining capacity a

35、nd increases the amount of transportation fuels produced.All oil whether its light,medium or heavy needs to be refined once its out of the ground so it can be made into usable products.Through our 50 percent ownership in two oil refineries in the U.S.Wood River,located in Illinois,and Borger,located

36、 in Texas we capture the full value from crude oil production through to refined products such as gasoline,diesel and jet fuel.Our low-cost natural gas operations,which we consider financial assets,provide strong cash flow to help fund our oil growth,and offset the cost of the natural gas we consume

37、 within our oil sands and refining operations.maximizing value throughour integrated approachCompleted coker construction and start up of the CORE project at Wood River RefineryIncreased total Canadian heavy crude oil processing capacity to between 200,000 barrels per day and 220,000 barrels per day

38、Produced more than 650 million cubic feet of natural gas per day,offsetting internal consumption of 110 million cubic feet per day from our oil and refining operations unlocking adding building generating maximizingPROVIDING MORE THAN FUEL Nearly everything we use from carpets,to computers,to contac

39、t lenses is either made from oil and natural gas by-products,made by machinery or in facilities powered by oil and natural gas,or transported by fuels,like gasoline or diesel,which are refined from oil.valueproviding value for people every daycenovusWere proud of the way we develop the resources tha

40、t provide such value.and were proud of the role we play in making peoples lives a little easier and a little better.oil and natural gas are more than just sources of fuel.they contribute to the building blocks of thousands of products we use and rely on every day.products that make a positive differ

41、ence in our lives.increasing value Byachieving our milestonesWere delivering on our 10-year business plan which is focused on increasing total shareholder return.2011 was an excellent year,a year in which we met or exceeded every milestone we set.the reason we set specific milestones is so we can me

42、asure our achievements and you can track our progress.increasing value Byachieving our milestonesGrow reserves and contingent resourcesIncreased best estimate bitumen economic contingent resources by 34 percent to 8.2 billion barrelsAdded proved reserves of 366 million barrels of oil equivalentDrill

43、 450 stratigraphic test wells and assess results Completed largest stratigraphic test well drilling program we have ever undertaken with 480 oil sands wells and 11 conventional wellsSanction Foster Creek phases F,G&HInitiated site construction on these phasesAchieve first production at Christina Lak

44、e phase CCompleted ahead of schedule and under budgetReceive regulatory approval for Christina Lake phases E,F&G and commence sanctioning process for EBegan construction on phase E and initiated site preparation on phase FExpand the polymer flood and drill additional infill wells at Pelican Lake,whi

45、ch is expected to result in higher productionDrilled 31 infill wellsSubmit revised Telephone Lake applicationIncreased expected production capacity to 90,000 barrels per day from 35,000 barrels per dayAchieve first production at Grand Rapids pilot and submit regulatory application for commercial ope

46、ration with production capacity of up to 180,000 barrels per dayStart up coker as part of Wood River CORE projectDoubled heavy oil processing capacityImplement the Cenovus Operations Management System Resulted in company-wide framework of operations practices and processesImplement at least one new

47、commercial technologyCommercialized our patented blowdown boiler technologyAdvance environment key performance indicators and long-term impact forecastingProgressed with a focus on fresh water,carbon emissions and land reclamationIntegrate the six commitment areas of our Corporate Responsibility Pol

48、icy into the business in order to create value for both our company and the communities where we live and workGrow reserves and contingent resourcesDrill 400 to 500 stratigraphic test wells and assess resultsAchieve first production at Christina Lake phase DAnticipate regulatory approval and commenc

49、e sanctioning process for Narrows LakeStart constructionAchieve production growth response from the Pelican Lake expansionPursue additional conventional oil growth opportunities Connect Shaunavon and Bakken central facilities to pipeline to support tight oil production growth in the areaImplement at

50、 least one new commercial technology Demonstrate stable and reliable CORE operation at Wood River RefineryAdvance value creation from Telephone Lake assetDevelop tailored business unit environmental performance strategiesLOOKING AHEAD Our Christina Lake project,pictured left,is on track for continue

51、d growth.Substantial construction was completed for phases D and E and site preparation progressed for phase F.We also submitted an application to add co-generation facilities.The application includes a gross production capacity increase at both phases F and G to 50,000 barrels per day from 40,000 b

52、arrels per day.152011 milestonesAll milestones were met or exceeded2012 milestonesMilestones set so farOUR MILESTONES CEnovus EnERgy AnnuAl REPoRt 2011“The men and women who make up Cenovus have once again surpassed my expectations.I am extremely proud of what our teams have accomplished in this,our

53、 second year as an independent oil company.We are well on our way to achieving our 10-year business plan.”A STRONG FOUNDATION FOR CONTINUED GROWTHover the course of 2011,we met or exceeded every milestone we set for ourselves.We proved once again that you can count on us to develop our resources saf

54、ely and responsibly,and to advance our projects in a consistent,predictable and reliable manner.All while striving to be better at how we do it.It was a year with great operational results,tremendous reserves and resources growth and excellent financial performance.A year in which we continued the m

55、omentum of 2010 and laid the foundation for new opportunities and decades of growth in front of us.16MESSAGE FROM OUR PRESIDENT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPoRt 2011 creating value Bydeliveringour strategy is centred on developing our vast oil assets and on continuing to bring fo

56、rward the value of our tremendous resource base.In 2011,we updated our 10-year business plan to expand oil sands and also conventional oil opportunities.We now expect to reach about 500,000 barrels per day of net oil production by the end of 2021.We made significant progress in 2011.oil sands produc

57、tion at Foster Creek and Christina lake increased 13 percent over 2010.We advanced timelines for future phases at both these projects and completed our 2011 stratigraphic test well program to continue unlocking even more value from our oil sands assets.We also strategically increased investments in

58、areas of conventional oil growth,including Pelican lake and tight oil properties in southern saskatchewan.As a result of our activity,we increased our total proved reserves by 17 percent and our best estimate bitumen economic contingent resources by 34 percent in 2011 compared with 2010.the success

59、we achieved in our oil and gas operations was complemented by success in our refining business in 2011.We not only completed the multi-year expansion project at our Wood River Refinery in Illinois,but also delivered strong cash flow from our refining business overall.With our integrated business mod

60、el we are able to mitigate risk of commodity price fluctuations to our cash flow over the long-term.In 2011,oil production growth across our operations,combined with strong oil prices and excellent financial results from 17MESSAGE FROM OUR PRESIDENT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPo

61、Rt 2011“Over the course of 2011,we met or exceeded every milestone we set for ourselves.We proved once again that you can count on us to develop our resources safely and responsibly,and to advance our projects in a consistent,predictable and reliable manner.”creating value Bydeliveringboth our refin

62、ing business and our low-cost natural gas assets,generated total cash flow of almost$3.3 billion or$4.32 per share on a fully diluted basis an increase of 36 percent compared with 2010.We also strengthened our balance sheet and our financial capacity in 2011,ending the year with a debt to capitaliza

63、tion ratio of 27 percent and a debt to adjusted earnings before interest,taxes,depreciation and amortization(EBItDA)of 1.0 times,which are at or below our long-term targeted ranges.We are funding our growth plans while providing a dividend to you,our shareholders one that we increased by 10 percent

64、to$0.22 per share for the first quarter of 2012.We expect ongoing financial strength will allow us to place a priority on continuing to grow the dividend over time.Each year we identify key milestones,so our shareholders can track our progress.the 2011 milestones are listed on page 15 of this report

65、.As you will see,every one of them has a check mark.In addition,we set five areas of focus in 2011 to guide our work.that clarity enabled us not only to deliver on all our commitments,but also to continue maximizing value.OUR FIVE AREAS OF FOCUS 1.Execution:Delivering on our growth commitmentsWe rem

66、ained focused on delivering strong performance in 2011 and on successfully achieving the goals we had set for ourselves.We continued to develop our major oil sands assets.We brought the 40,000 barrel per day phase C expansion on at Christina lake under budget and ahead of schedule,which should allow

67、 us to reach full capacity by mid-2012 and advance start up of the next expansion phase.Between Foster Creek and Christina lake,we have now commissioned eight phases totalling 178,000 barrels per day of gross production capacity.We have another seven phases under construction,approved by regulators

68、or sanctioned by our partner,ConocoPhillips,which will add an additional 285,000 barrels per day of gross production capacity by 2017.Add to that our expected increase in conventional oil production and you can see that were well on our way to achieving our longer-term production goals.As our heavy

69、oil production is increasing,we also increased our heavy oil processing capacity in a cost-efficient manner at the Wood River Refinery,a location already served by existing pipelines.We added new capacity this past year at Wood River with the successful completion of coker construction and start up

70、of the coker and refinery expansion(CoRE)project.getting our oil to market is an essential consideration as our production grows its all about access.Within the next 10 years we expect to be marketing over one million barrels of oil per day on behalf of ourselves and our partner.our marketing and tr

71、ansportation strategies are developed to support our production growth strategy and our approach is to ensure we always have transportation options.Along with a number of other producer companies,we support the northern gateway Pipeline,and were supportive of all pipeline projects that would open up

72、 access to new markets for Canadian oil.In late 2011,we took a small but important step in building new markets in California and Asia through a service commitment we secured with trans Mountain Pipeline.We also continue to use existing infrastructure,such as other pipelines and rail,to ship our gro

73、wing production.Another essential consideration as we grow is our environmental performance.Environment is a strategic business consideration at Cenovus,and we are implementing a progressive approach by integrating environmental performance into the business decisions we make.Protecting air quality,

74、land and water will continue to be a critical part of that approach as we grow the company.In order to continue to meet our commitments and execute on our 10-year plan,our people need the right tools and processes.I am pleased that we were able to implement our Cenovus operations Management system i

75、n 2011.It will help us meet the high standards we have set for safety,environment and operating performance.you can read more highlights from 2011 starting on page 32.“Environment is a strategic business consideration at Cenovus,and we are implementing a progressive approach by integrating environme

76、ntal performance into the business decisions we make.”18MESSAGE FROM OUR PRESIDENT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPoRt 2011“A companys reputation is one of its most important assets.Thanks to the dedication and actions of our people,I believe we have a reputation and a company to be

77、 proud of.”Cenovus shares outperformed the market in 2011Total shareholder return(TSX)-10-505+4%Cenovus Energy-9%S&P/TSX Composite Index-10%S&P/TSX Energy IndexPercentage2.Value creation:Achieving a material increase in shareholder valueWe plan to create value for our shareholders by growing our net

78、 asset value(nAv)and continuing to pay a strong and growing dividend over time.In addition to growing our dividend in 2012,we have made,and are continuing to make,significant strides towards our goal of doubling nAv between 2010 and 2015.We want our employees to be able to measure their progress in

79、increasing the value underlying each share.so,using the average of three independent external sources,we established a baseline illustrative nAv of$28 per share at December 2009.this number grew to$32 per share at year end 2010 and$37 per share at year end 2011 a 32 percent increase from 2009.We inc

80、reased shareholder value in 2011 by advancing growth in our existing plays and identifying new opportunities from our resource base all while continuing to be a low-cost operator.Im pleased to report that in 2011 we again demonstrated strong total shareholder return outperforming the s&P/tsX Energy

81、Index and the s&P/tsX Composite Index by 14 percent and 13 percent respectively.3.Innovation:Balancing our manufacturing approach with our need to innovateone of the reasons we can successfully execute our projects relates to how we develop our oil sands assets we balance a manufacturing approach wi

82、th our need to continuously improve how we do things.the manufacturing approach we take in the design,construction and operation of our facilities gives us the ability to grow at a planned pace,allowing us to target bringing on one new phase of production about every 12 to 18 months.this manufacturi

83、ng approach enables us to stay focused on safety,quality and cost,and complete projects on schedule.However,we are also driven to innovate to find ways to increase resource recovery while improving the way we produce oil and natural gas.thats why we continue to invest in technology development aimed

84、 at improving different aspects of our business,and its why we are consciously building a strong culture of innovation at Cenovus.A highlight of the year for me,personally,was our hugely successful two-day summit dedicated to innovation and the sharing of ideas.the intent was to inspire and empower

85、our people to rethink their work and adopt a solutions-oriented frame of mind.throughout this report you will see a sampling of our innovations put into practice.For example,our nisku yard in Alberta where we assemble entire modular units for shipment to Christina lake and Foster Creek,and our paten

86、ted blowdown boiler technology,commercialized in 2011,which increases the amount of steam we can create from the same barrel of water from about 80 percent to approximately 93 percent.our innovations are focused on increasing our efficiencies,improving our environmental footprint and reducing our ov

87、erall costs.4.Reputation and communication:Living up to our commitments;telling our storyA companys reputation is one of its most important assets.thanks to the dedication and actions of our people,I believe we have a reputation and a company to be proud of.I am afforded many opportunities to talk a

88、bout Cenovus,the tremendous resource base that is driving our oil growth strategy and our commitment to developing it responsibly.In 2011,we told our story in a number of ways:we released our first corporate responsibility report;we launched a new commercial,A different oil sands,which shows the dri

89、lling side of the oil sands;and we invited hundreds of people politicians,media,investors and our own employees to visit Christina lake and Foster Creek to see our oil sands operations first-hand.seeing really is believing.As Ive said to a number of our guests,a pictures worth a thousand words,and a

90、 visit is worth a thousand pictures.“In addition to growing our dividend in 2012,we have made,and are continuing to make,significant strides towards our goal of doubling NAV between 2010 and 2015.”creating value BydeliveringBrian C.Ferguson President&Chief Executive officer19MESSAGE FROM OUR PRESIDE

91、NT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPoRt 2011We are,and have always been,focused on living up to our promises and on being a good neighbour.our philosophy is to work with communities and stakeholders to build shared value.We want the communities where we live and work to be stronger a

92、nd better off as a result of us being there.5.Healthy organization:Ensuring Cenovus is a great place to workA strong reputation helps attract talented people,which is especially important if youre hiring hundreds of employees,as we did in 2011.More than 700 people joining the company in a year is tr

93、emendous growth when you consider we started the year with 3,400 people.And,as we continue to grow,well need to hire even more.thats why were committed to building a healthy organization.one that fosters a positive,safe,vibrant workplace.one that inspires.And one that our employees enjoy coming to e

94、very day knowing their work matters and is contributing to the companys objectives and priorities.our strategy maps out our future,but its our people who will drive our success.Its our people who can make our company great.thats why it is so important to me that our employees are happy to be at Ceno

95、vus and have a clear understanding of how they are adding value,every day.I am extremely pleased to report that the results of our first employee engagement survey conducted last year show that Cenovus is a place where people want to work.our employees are energetic and enthusiastic.they are proud o

96、f their company and the work they do.they recognize the high expectations of Cenovus and they want to do more.WHAT TO ExPECT IN 2012 CONSISTENT,PREDICTABLE,RELIABLE PERFORMANCEthere is no question that our 10-year plan is ambitious,but I know we can achieve it.We are extremely well-positioned in ter

97、ms of the quality of our resource,our portfolio of opportunities and our ability to deliver value.In 2012 we plan to grow our oil production significantly.this production growth is expected to come as we ramp up production on existing phases,such as the Christina lake phase C expansion,as well as fr

98、om other projects as they progress.We plan to increase our total capital spending for 2012 by about 20 percent compared with 2011,with most of that investment being made on advancing existing and new oil sands projects,as well as on our Pelican lake and conventional oil assets.We are increasing our

99、investment in technology and each year expect to commercialize at least one of the more than 140 technology development projects we currently have underway.you can also expect to see continued workforce growth as we increase employee numbers in alignment with our 10-year business plan.Weve outlined

100、our 2012 milestones so you can track our progress(see page 15).With the outstanding work of our people over the past two years,we have already proven we can achieve great things in our industry.My sincere thanks to our Board of Directors,our Executive team,and our employees and contractors for their

101、 contributions to our great results,and for having such passion and energy for Cenovus.Certainly,we have accomplished a lot in our first two years as an independent company.We have established ourselves as a reliable company thats developed a predictable and transparent growth plan.We have continued

102、 to demonstrate measurable progress on the milestones we have set for ourselves and we are well on our way to achieving our goal of doubling net asset value by the end of 2015.yet,in many ways,we have only just begun.We have so many opportunities ahead of us.My promise to you is that we will stay fo

103、cused on our 10-year plan:setting milestones,achieving excellent results and improving our environmental performance.you can expect us to deliver consistent,predictable,reliable performance year after year.our Executive team and I look forward to our exciting future.“We are extremely well-positioned

104、 in terms of the quality of our resource,our portfolio of opportunities and our ability to deliver value.”“You can expect us to deliver consistent,predictable,reliable performance year after year.”“Our strategy maps out our future,but its our people who will drive our success.Its our people who can

105、make our company great.”20MESSAGE FROM OUR PRESIDENT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPoRt 201114162224283032394042871519415714616114162220TABLE OF CONTENTS CEnovus EnERgy AnnuAl REPoRt 2011table of contentsOur milestones Sampling of improvements madeConsolidated financial statementsA

106、dditional reserves and oil and gas informationOur teams Managements discussion and analysis(MD&A)Q&A with our Executive TeamOperating and financial highlightsDiscover more about SAGD technologyMessage from our Board Chair Supplemental information Corporate and shareholder informationMessage from our

107、 President&Chief Executive Officer2011 highlights Notes to consolidated financial statementsAdvisory 21providing value for people every daycenovus283039USING SPECIALIzED TECHNOLOGY Pictured here is Foster Creek,our largest SAGD project,situated on the Cold Lake Air Weapons Range in northern Alberta.

108、FORWARD-LOOKING INFORMATION This Annual Report contains forward-looking information about our strategy,milestones,goals,targets and future expectations.This forward-looking information is based on certain factors and assumptions and is subject to risks and uncertainties,some of which are specific to

109、 Cenovus and others that apply to the industry generally.For details about these factors,assumptions,risks and uncertainties,please refer to the Advisory.All estimated timelines are subject to regulatory and/or partner approval.Readers are cautioned not to place undue reliance on forward-looking inf

110、ormation as our actual results may differ materially from those expressed or implied.For an overview of our approach to risk management,see“Risk Management”in our MD&A.NON-GAAP MEASURES This Annual Report contains references to certain financial measures which do not have a standardized meaning as p

111、rescribed by GAAP.A description of each non-GAAP measure,including a definition and reconciliation with GAAP measures,is included in our MD&A.OIL AND GAS INFORMATION This Annual Report contains information about our reserves and our bitumen resources.For additional information about our reserves,con

112、tingent and prospective resources,see“Oil and Gas Reserves and Resources”in our MD&A and“Additional Reserves and Oil and Gas Information”in this Annual Report.22DISCOVER MORE ABOUT SAGD TECHNOLOGY CEnovus EnERgy AnnuAl REPoRt 201124 our oil sands projects aredriving our growthWe currently have two p

113、roducing SAGD projects in the oil sands Foster Creek and Christina Lake as well as several emerging projects,which are in various stages of development,and will play a significant part in our growth plan.FOSTER CREEK our largest project,considered among the best commercial and technical sAgD project

114、s in the industryLocation:About 330 km northeast of EdmontonReservoir depth:450 mNumber of phases:eight so far(phases A,B,C,D&E are in operation;F,g&H are in early construction;application for future phases is expected to be submitted for regulatory review in 2013)Producing wells:204Production:avera

115、ged approximately 110,000 barrels per day grossUltimate gross production capacity:between 290,000 and 310,000 barrels per dayEmployees:about 585,including many local residents CHRISTINA LAKE A top-tier reservoir with huge potential for growthLocation:about 120 km south of Fort McMurrayReservoir dept

116、h:375 mNumber of phases:seven so far(phases A,B&C are in operation;D&E are in construction;F&g are planned and have received regulatory approval;application for H is expected to be submitted for regulatory review in 2013)Producing wells:38Production:averaged approximately 23,000 barrels per day gros

117、sUltimate gross production capacity:approximately 278,000 barrels per dayEmployees:about 480to minimize the impact on the land,we drill several horizontal well pairs from a single compact area called a well pad.A typical well pad,which covers about 10 to 12 acres of surface land,can access about 185

118、 acres of resource underground.Weve successfully reduced the size of our well pads over time.A WELL PAD AT CHRISTINA LAKEour oil production is expected to increase to nearly half-a-million Barrels per day net By the end of 2021.HORIzONTAL WELL PAIRAPPRoX 450 m DEEPTOP SOILCLAYROCKOIL MIxED IN SANDST

119、EAM OIL AND WATERWELLHEADSSTEAMSTEAM GENERATORSTOP UP WATER ADDEDROCK1243technologysteam-assistedDISCOVER MORE ABOUT SAGD TECHNOLOGY CEnovus EnERgy AnnuAl REPoRt 2011using less Water and using itresponsiblyWater is an essential component of our operations.Were continually looking to implement new wa

120、ys to reduce the amount of water we use to produce oil.None of the water we use to produce steam at our oil sands operations is fresh.steam generators,pictured above,convert about 80 percent of one barrel of water to steam.to minimize waste,weve developed a process to re-boil the leftover water in a

121、 second generator to make additional steam.this re-boiling process,which is a Cenovus innovation,increases the amount of steam we can create from the same barrel of water from 80 percent to about 93 percent.We commercialized our blowdown boiler technology in 2011.IMPROVING OUR STEAM GENERATION PROCE

122、SS BY USING BLOWDOWN BOILER TECHNOLOGY HOW SALTY IS THE WATER WE USE?In our oil sands operations we primarily use saline water drawn from aquifers deep underground.saline water is classified in Alberta as having more than 4,000 milligrams of salt per litre.STEAM TO OIL RATIO:A KEY MEASURE OF SAGD EF

123、FICIENCYsteam to oil ratio(soR)is the amount of steam used to produce a barrel of oil.Cenovus has one of the lowest soRs in the industry.our combined soR for Foster Creek and Christina lake in 2011 was about 2.2.A low soR is a reflection of the quality of the reservoir and the approach used to devel

124、op the resource.Using less steam means:less water use less natural gas used to create steam lower emissions smaller surface footprint lower operating costs lower capital costsSaline water levelsApproximate milligrams of salt per litreGraph not to scale.Acceptable drinking water500 mgOcean water30,00

125、0 mg5,000 to 10,000 mgChristina Lakewater sourceFoster Creekwater source6,000 mgOIL AND WATER SEPARATED;WATER TREATED FOR RECYCLINGOIL TRAVELS BY PIPELINE TO REFINERIES IN CANADA AND THE U.S.OIL AND WATER5RECYCLED WATER6PRODUCTS WE USE EVERY DAY,SUCH AS DIESEL,JET FUEL,GASOLINE,FERTILIzER AND PLASTI

126、CSin actiongravity drainage(SAGD)DISCOVER MORE ABOUT SAGD TECHNOLOGY CEnovus EnERgy AnnuAl REPoRt 2011142536STEAM IS GENERATEDSteam is used to soften the reservoir,so the oil can flow through the sand and be pumped to the surface.The steam is created in generators at our facilities and then transpor

127、ted by pipeline to the wellhead.The water used for steam is too salty to drink,as is most of the water used at our oil sands operations.OIL AND WATER ARE BROUGHT TO SURFACEThe small slots in the pipe act as a filter,allowing the oil and water in while keeping the sand out.The oil and water are then

128、brought to the surface.STEAM IS INJECTED UNDERGROUNDThe steam is injected into the top well of a horizontal well pair to soften the oil.OIL AND WATER ARE SEPARATED The water is separated from the oil,treated and topped up with new water.Most of the water is returned to our steam generators where its

129、 reused over and over again.OIL IS SOFTENED SO IT CAN FLOWThe softened oil,along with the water from the condensed steam,flows into the bottom well through slots in the pipe.OIL IS TRANSPORTED TO BE REFINEDThe oil is transported by pipeline to refineries in Canada and the U.S.The oil is turned into

130、products like gasoline,diesel,jet fuel and other petroleum-based materials,which are turned into the many products we use and rely on every day.Unlike conventional oil,most of the oil in the oil sands doesnt flow naturally,so unconventional methods are used to access it.Canada is fortunate to have t

131、he oil sands,with enough oil to meet the countrys current energy demand for generations.There are two methods used to access the oil depending on how deep it is.If the oil is located close to the surface,its mined.If its deep underground,its drilled and pumped to the surface using specialized techno

132、logy like steam-assisted gravity drainage(SAGD).Projects that are drilled have a smaller surface land disturbance and dont require tailings ponds.All of Cenovuss projects are drilled.discover more about sagd technologyenhancing value throughleadershipour executive team guides our plans,prioritizes o

133、ur initiatives and leads by example.underpinning their strong leadership is a tremendous depth of talent and knowledge that will enable us to execute on our 10-year business plan and continue to increase value for our shareholders.23DISCOVER MORE ABOUT SAGD TECHNOLOGY CEnovus EnERgy AnnuAl REPoRt 20

134、11unlocking value throughSAGD technologyunlocking value throughsagd technology25enhancing value throughleadership“Our financial strategy supports the value pledge weve made to investors to deliver on our commitments,build net asset value and generate sustainable growth for decades.”“I believe weve s

135、et a new standard for what SAGD projects are capable of achieving and thats exciting.”Ivor Ruste Executive vice-President&Chief Financial officerJohn Brannan Executive vice-President&Chief operating officerWith all this growth,how is the company able to improve its performance?John Brannan We have a

136、n overall philosophy of continuous improvement at Cenovus that keeps us focused on being better at what we do.our manufacturing approach to developing our oil sands projects in manageable phases is a great example.our teams are able to apply what they learn from one phase to the next,so over time we

137、 become even more efficient.these efficiencies help us keep our costs and our overall impact on the environment low.In 2011,we also focused on operational excellence by working smarter to optimize the capacity of the facilities weve installed.overall,this has made us more cost-efficient.While we mad

138、e some great strides as a company this past year,theres always room to improve.thats why Im asking our operations teams to continue to focus on efficiencies in 2012.Kerry Dyte our focus on continuous improvement is evident across the company.our employees look for ways to improve day by day driving

139、significant step changes that have a huge impact on our base business,and also implementing small incremental improvements where they can.It doesnt have to be a big idea to be a good idea and that thinking has really inspired each and every one of us to look at how we do our jobs.no matter where we

140、work,we can add to the companys value by improving a process,increasing our efficiency or driving down costs.Hayward Walls to add to what Kerry said,were consciously creating the kind of culture that fosters new ideas and new approaches.Having engaged employees is critical to our success and thats o

141、ne reason we made a commitment to employee development.Employee development supports the career progression of our people in both our technical and managerial career streams.It leads to personal and business growth,and ensures our employees are challenged,have interesting work and are engaged and th

142、at helps us to deliver on our commitments.The oil sands industry continues to face public scrutiny around environmental issues.What is Cenovus doing to address this challenge?Judy Fairburn In 2011,we continued to integrate long-term environmental planning into our business.In 2012,well be rolling ou

143、t company-wide environmental commitments to further improve our environmental performance.We want to reinforce that everyone in the company has an accountability for the environment.Q&A WITH OUR ExECUTIVE TEAM CEnovus EnERgy AnnuAl REPoRt 2011Cenovus plans to double net asset value by the end of 201

144、5.Can you highlight what you achieved in 2011 to further that goal and how youre continuing to build shareholder value?John Brannan All our teams have really built on our momentum from 2010.Weve done a great job of setting targets and meeting our goals and objectives,including growing our oil produc

145、tion.For example,one of our key achievements was bringing on the phase C expansion at our Christina lake project which grew our production capacity by 40,000 barrels per day gross at an industry-leading capital efficiency.Im proud of the teams for not only bringing that expansion phase on safely but

146、 for bringing it on ahead of schedule and under budget.I believe weve set a new standard for what sAgD projects are capable of achieving and thats exciting.Don Swystun the successful start up of the coker at the CoRE project at our Wood River Refinery is another great example of how were building sh

147、areholder value.CoRE was a major milestone for our company as well as a testament to the commitment and dedication of the Cenovus and ConocoPhillips staff working together.With solid planning,cost control and execution we were able to achieve best-in-class capital cost efficiency.the new four-drum c

148、oker allows us to upgrade more heavy oil feedstock into transportation fuels,increasing the overall profitability of the refinery and contributing to our net asset value.Ivor Ruste our many operational milestones also helped us achieve great financial results.We experienced strong margins,increased

149、cash flow by 36 percent and strengthened our solid balance sheet.our financial strategy supports the value pledge weve made to investors to deliver on our commitments,build net asset value and generate sustainable growth for decades.26Q&A WITH OUR ExECUTIVE TEAM CEnovus EnERgy AnnuAl REPoRt 2011Kerr

150、y Dyte We make sure that every day were operating our business in a way we can be proud of.like every industry,energy development has an impact on the environment,but we minimize that as much as we can.John Brannan Were constantly striving to improve our performance,and one of our ongoing objectives

151、 is to advance technologies that increase oil production using the least amount of water,natural gas,electricity and land.We also want to make sure that people understand what we do,so were actively telling our story.Sheila McIntosh We use a variety of communication methods to help people understand

152、 our business better.our aim is to showcase the drilling side of the oil sands,which isnt as well known.Were proud of our business,and we take our job of developing the oil sands resource in a responsible manner seriously.our employees and contractors are great ambassadors for our company.Having mor

153、e than 4,000 people telling our story is a powerful way to communicate.We encourage them to talk about the industry with their friends and family,share our story,show pictures of our operations,and be proud of the important work theyre doing to develop energy resources responsibly.Youve talked about

154、 a number of ways Cenovus is working to improve.Can you explain how innovation and technology advancements play into that?Harbir Chhina Innovation and technology advancements allow us to be a low-cost leader.one of the ways weve been able to distinguish ourselves in this industry is by innovating as

155、 we go,and when it comes to innovation I believe were just getting started.one of our significant innovations so far is our Wedge WelltM technology,which allows us to produce 10 to 15 percent more oil with almost no additional steam required.Wedge WelltM technology improves our environmental perform

156、ance and drives down our operating costs.In my experience,technology advancements are a competitive advantage in this industry and thats why weve made such a strong commitment to fund and support technology innovations.Don Swystun Innovation really is the key to being better in this business.Weve ha

157、d some great successes already as a company,and thats exciting to be a part of.At this point,we have more than 140 technology development projects on the go,addressing all aspects of improving our business including construction,wellbore design,recovery schemes and drilling.About 75 percent of our t

158、echnology developments will result in reductions in our environmental footprint.Weve made great strides over the years,but we want to get better.Im confident well get there with time,well-invested dollars and the bright people we have working at Cenovus.Judy Fairburn Id expand on Dons and Harbirs po

159、ints to say innovation goes beyond technology.I believe innovation is about a mindset,approaching situations and problems in a different way.sAgD technology unlocked the resource potential of the oil sands more than a decade ago,and innovation will help us solve the environmental challenges we still

160、 face today.Its a fast-moving business and our strategy,our approach,our technology and our people they all have to stay ahead of the curve to continue building value.“One of the ways weve been able to distinguish ourselves in this industry is by innovating as we go,and when it comes to innovation I

161、 believe were just getting started.”“CORE was a major milestone for our company as well as a testament to the commitment and dedication of the Cenovus and ConocoPhillips staff working together.”“Were proud of our business,and we take our job of developing the oil sands resource in a responsible mann

162、er seriously.”Harbir Chhina Executive vice-President,oil sandsDon Swystun Executive vice-President,Refining,Marketing,transportation&Development Sheila McIntosh Executive vice-President,Communications&stakeholder Relations27 You achieved a number of significant operational milestones in 2011,in both

163、 the production and refining parts of the business.Can you talk about how the company is creating value from its portfolio of undeveloped assets?Harbir Chhina We need to continue to build value by moving our resources along the value chain.the primary way we can do that is by drilling stratigraphic

164、test wells.the data we get from these wells helps us to better define our resources and bring projects closer to approval and production,which inherently increases the value of those assets.the results from our stratigraphic drilling program contributed to an increase in our best estimate bitumen ec

165、onomic contingent resources to 8.2 billion barrels from 6.1 billion barrels and in our proved bitumen reserves to 1.5 billion barrels from 1.2 billion barrels.the results reinforced what we already knew were just getting started with this business and our future is rich with opportunity.Ivor Ruste W

166、ith such a rich portfolio of assets we wont be in a position to develop some of them for many years,so were looking for other ways to bring the value forward.In 2011,we began discussions with interested parties looking to invest in our oil sands holdings.the asset weve identified to be part of this

167、potential strategic transaction is the expanded telephone lake project,which is a huge untapped resource.Weve had interest from around the globe in what we believe is a world-class opportunity.talks are ongoing.A strong reputation is an important asset for any company what is Cenovus doing to build

168、its reputation?Sheila McIntosh A key way were building our reputation is by meeting our commitments ensuring were walking the talk.Its critical we perform to the high standards weve set for ourselves and that weve encouraged our stakeholders to expect from us.For me,reputation is a critical measure

169、of success,and its something we work on every day.Were strengthening relationships.Were partnering with the communities where we live and work.Were focusing on good governance and transparency.Were living up to the commitments outlined in our Corporate Responsibility Policy.And were talking to peopl

170、e about the good work were doing.All these activities allow us to showcase our company and build our reputation.Hayward Walls our people have a huge hand in building our reputation because they make Cenovus the company it is.the passion they bring to sharing our story with family and friends is help

171、ing to build our reputation and makes people want to join our workforce.And thats great news.We will need a lot of people over the next decade to deliver on our growth plan,which is why we maintain a 10-year workforce plan to help ensure we have and continue to develop the organizational capacity we

172、 need to deliver on our commitments.“SAGD technology unlocked the resource potential of the oil sands more than a decade ago,and innovation will help us solve the environmental challenges we still face today.”“Our people have a huge hand in building our reputation because they make Cenovus the compa

173、ny it is.”“Our employees look for ways to improve day by day driving significant step changes that have a huge impact on our base business,but also implementing small incremental improvements where they can.”Judy Fairburn Executive vice-President,Environment&strategic PlanningHayward Walls Executive

174、 vice-President,organization&Workplace DevelopmentKerry Dyte Executive vice-President,general Counsel&Corporate secretaryenhancing value throughleadershipQ&A WITH OUR ExECUTIVE TEAM CEnovus EnERgy AnnuAl REPoRt 2011driving value Byworking together our teams work together to make smart decisions,adva

175、nce technology and continuously improve.they inspire,share and learn from each other,and are the driving force behind our extraordinary achievements.WORKING TOGETHER Our teams are committed to embracing fresh thinking and new ideas.We leverage our more than 40 years of operating experience by workin

176、g together to improve,solve problems and apply new thinking to our work in a practical,yet creative way.29OUR TEAMS CEnovus EnERgy AnnuAl REPoRt 2011 Saskatchewan,Shaunavon/Bakken Oil&Natural Gas,Saskatchewan,Weyburn Operations Support Teams Environment Funds&Cenovus Operations Management System(COM

177、S)Governance Operations Health&Safety Health&Safety,Oil Sands Health&Safety,Oil&Natural Gas Occupational Health Operations Management System Safety&Emergency Management Operations Planning&Land Operations Shared Services Business Services,Energy Asset Management Business Services,Engineering Technic

178、al Services Business Services,Facility Integrity Technical Services Business Services,Maintenance&Reliability Technical Services Drilling Operations Training Project Controls&Infrastructure Supply Chain Management&Innovation&Continuous Improvement Supply Chain Management&Innovation&Continuous Improv

179、ement,Drilling&Infrastructure Supply Chain Management&Innovation&Continuous Improvement,Operations Supply Chain Management&Innovation&Continuous Improvement,Projects Supply Chain Management&Innovation&Continuous Improvement,Strategic Services Regulatory,Local Community&Military Local Community Relat

180、ions Military Liaison Regulatory&Environmental Compliance Regulatory&Environmental Applications Transportation Regulatory Services Communications&Stakeholder Relations Communications,E-Communications&Library Services Communications,External Communications&Brand Management Communications,Internal Com

181、munications Community Affairs Government Affairs&Corporate Responsibility,Corporate Responsibility Investor Relations,Business Intelligence Media Relations Environment&Strategic Planning Environment Technology Investments Environment Strategy&Policy Strategic Environment Collaboration Strategic Plan

182、ning&Reserves Governance Finance,Risk and A&D Comptrollers,Budgets&Forecasts Comptrollers,Conventional Oil&Natural Gas Comptrollers,Finance Shared Services Comptrollers,Oil Sands Comptrollers,Refining,Marketing,Transportation&Development Accounting Comptrollers,Reporting Financial&Enterprise Risk,Ri

183、sk Analytics Financial&Enterprise Risk,Risk Compliance&Reporting Sox Compliance Tax Treasury,Cash Management Treasury,Treasury&Planning Legal,Corporate Secretarial&Internal Audit Internal Audit Legal&Corporate Secretarial Operations Legal Organization&Workplace Development Administrative Services,Ad

184、ministrative Services Field Solutions Administrative Services,BOW Transition Logistics Administrative Services,Building&Office Services Administrative Services,Meetings&Events Administrative Services,Real Estate Services Executive Office Support Governance,Compliance&Security,Cenovus Security Govern

185、ance,Compliance&Security,IT Security&Information Governance Governance,Compliance&Security,Organization&Workplace Development Contracts&Business Office HR Advisory HR Development&Operations,HR Operations HR Development&Operations,Organizational Development HR Development&Operations,Workforce Practic

186、es&Central Advisory Information Services,Architecture Information Services,Business Office Information Services,Corporate IT Solutions Information Services,IT Technical Services Information Services,Upstream IT Solutions Leadership Strategy&DevelopmentOil Sands Christina Lake,Facilities Christina La

187、ke,Geology and Geophysics Christina Lake,Operations&Productions Christina Lake,Project Development Christina Lake,Reservoir Engineering Greater Pelican Assets Greater Pelican Assets,Operations,Pelican Lake Land&FCCL Partnership Narrows Lake New Resource Plays,Business Ventures New Resource Plays,Geo

188、science New Resource Plays,NE Assets New Resource Plays,New Ventures New Resource Plays,Reservoir Engineering New Resource Plays,SW Assets New Resource Plays,Technical Analysis Primrose Assets,Athabasca Gas Primrose Assets,Facilities,Primrose Primrose Assets,Geology&Geophysics Primrose Assets,Infras

189、tructure and Support Services Primrose Assets,Operational Engineering Primrose Assets,Primrose Operations Primrose Assets,Reservoir Engineering Technology Development Refining,Marketing,Transportation&Development Market&Business Development Market Fundamentals&Hedging,Crude&Products Market Fundament

190、als&Hedging,Data Management&Basis Analysis Market Fundamentals&Hedging,Global&North American Gas Marketing,Transportation&Power,Business Services Marketing,Transportation&Power,Diluents Supply&Crude Oil Marketing Marketing,Transportation&Power,Gas Marketing&Optimization Marketing,Transportation&Powe

191、r,Power Marketing,Transportation&Power,Transportation&Business Development Refining Business Unit Oil&Natural Gas,Alberta,Brooks North Oil&Natural Gas,Alberta,Drumheller Oil&Natural Gas,Alberta,Land Oil&Natural Gas,Alberta,Langevin Oil&Natural Gas,Alberta,Production Operations Oil&Natural Gas,Albert

192、a,Suffield/Wainwright Oil&Natural Gas Alberta,Technology,Enhanced Oil Recovery&Commercial Development Oil&Natural Gas,Saskatchewan,Mineral/Surface Land Oil&Natural Gas,Saskatchewan,Operations,Saskatchewan Oil&Natural Gas,driving value ByWorking togetheradvancing value throughsmart progressWere proud

193、 of the progress weve made to date,which has led to tangible results both in improving our operations and reducing our environmental impact.as a company were passionate about finding new ways to keep getting better.CONDUCTING VEGETATION ASSESSMENTS As part of our reclamation planning,we conduct a ve

194、getation assessment before operations begin like the one we conducted near our Weyburn operation,pictured here.The purpose of these assessments is to record the plant life growing in the area.The same assessment is done to track regrowth after operations are complete and reclamation is underway.31ad

195、vancing value throughsmart progressSAMPLING OF IMPROVEMENTS MADE CEnovus EnERgy AnnuAl REPoRt 201131We look for ways to either improve existing technology or pursue new technology to access oil thats hard to recover using conventional methods Implemented our Wedge WelltM technology at Foster Creek a

196、nd Christina lake.We developed and patented this technology which,in addition to increasing total oil recovery,reduces the amount of steam we need.using less steam means were using less water and less natural gas.Completed a successful pilot project at our Christina lake operation that tested the us

197、e of a solvent to improve the sAgD process.the project demonstrated increased oil production while using less water and natural gas.Improved oil rates and resource recovery per well at our Pelican lake operation by using polymer flooding to access the oil.Extended the life of our oilfield in Weyburn

198、,saskatchewan,by injecting Co2 into the reservoir.We expect to store more than 30 million tonnes of Co2 underground over the life of the project.We have a track record of developing solutions that make our environmental touch lighter Advanced or introduced technological improvements,such as electric

199、 submersible pumps,to our sAgD process.these various improvements have reduced our oil sands greenhouse gas emissions intensity by more than 25 percent over the last eight years and helped us maintain an industry-leading steam to oil ratio.Installed remote cameras at our Christina lake and Foster Cr

200、eek operations.these cameras allow us to better understand wildlife habitats to inform future developments at our field locations.With this information,well be able to focus reclamation in higher animal traffic areas and build awareness with staff working in the area.Moved natural gas wells undergro

201、und to minimize land disturbance and military disruption on the Canadian Forces Base suffield range in southern Alberta.We encourage innovative thinking that results in both incremental improvements and game changing solutions Built our own assembly yard in nisku,Alberta,to construct modular units f

202、or our Christina lake and Foster Creek facilities.the crews follow an integrated process to build the units on site and oversee production and shipping,which helps control costs,quality,schedule and helps improve safety.Improved planning and execution of our capital program has enabled us to increas

203、e the number of oil sands stratigraphic test wells we drill to 480 compared with 100 wells three years ago.Established long-term agreements with two Aboriginal communities.these agreements provide benefits such as employment,community investment,business development,education and training.Added posi

204、tive observations of safe behaviour in our safety reporting to reinforce our culture of safety.enhancing oil recovery progressing our environmental performance putting neW ideas to Workheres a sampling of the improvements Weve made over the yearsgroWing value Bymeeting our commitmentsin 2011 we deli

205、vered great operational results and excellent financial performance,which contributed to our net asset value and share price performance.We met our commitments thanks to the energy,dedication and skill our employees bring to their jobs every day.332011 HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011gro

206、Wing value Bymeeting our commitments UPDATED 10-YEAR BUSINESS STRATEGY We built on our 2010 strategy,establishing new timelines and significant oil production increases for the next decade.set an oil production goal of 500,000 barrels per day net by the end of 2021,of which 400,000 barrels per day n

207、et is from the oil sands Anticipate regulatory approval of 400,000 to 500,000 barrels per day net of oil sands projects by 2015 STARTED UP COKER AT CORE PROJECT uPPER IMAgEWe own 50 percent of the Wood River Refinery in Illinois.the recent coker and refinery expansion increased Canadian heavy oil pr

208、ocessing capacity and the amount of transportation fuels the refinery can produce.ACHIEVED ExCELLENT FINANCIAL RESULTSWe achieved our expectations for cash flow of$3.3 billion in 2011.the growth in cash flow compared to 2010 was largely driven by great operating results from our refining business,so

209、lid oil production and strong crude oil prices.our refining business had an exceptional year thanks to improved refining margins,contributing$976 million to our operating cash flow.As a result of our strong performance,our balance sheet has strengthened as measured by our debt to capitalization rati

210、o of 27 percent and our debt to adjusted EBItDA of 1.0 times,both of which remain at or below our long-term targeted ranges.GENERATED STRONG CASH FLOW FROM NATURAL GAS loWER IMAgEWe have a large base of established,reliable natural gas properties in Alberta,including Drumheller,pictured right.We con

211、tinued to generate strong free cash flow from our natural gas operations,which we manage as financial assets.these natural gas assets contributed approximately$660 million in operating cash flow in excess of the capital spent on them.these low-cost operations are critically important to the success

212、of the company because of the cash flow they provide,which helps fund our oil growth.ADVANCED CHRISTINA LAKE OIL SANDS PROJECT IMAgE on FACIng PAgEWe build our oil sands projects in phases.Construction of phase D at Christina lake is more than 70 percent complete and production is expected in the fo

213、urth quarter of 2012.Construction of phase E is more than 30 percent complete,with initial production anticipated in the fourth quarter of 2013.34EDMONTONFORT MCMURRAYPEACE RIVERREGINAWEYBURNCALGARYGRAND RAPIDS/SAGD PILOT PROjECTTELEPHONE LAKE/EMERGING SAGD PROjECTPELICAN LAKE/HEAVY OIL PROjECTNARRO

214、WS LAKE/EMERGING SAGD PROjECTCHRISTINA LAKE/SAGD PROjECTFOSTER CREEK/SAGD PROjECTSHAUNAVON/CONVENTIONAL OILWEYBURN/CONVENTIONAL OILBAKKEN/CONVENTIONAL OIL CENOVUS ASSET OIL SANDS:LAND THAT CAN BE DRILLED OIL SANDS:LAND THAT CAN BE MINEDWe also have natural gas and some other conventional oil propert

215、ies across Alberta and southern saskatchewan,not shown on the map.Map not to scale.OUR OIL ASSETS OIL IS OUR GROWTH DRIVERFoster Creek and Christina lake are our two producing oil sands projects.grand Rapids is in the pilot project stage and telephone lake and narrows lake are both at an early stage

216、 of development.While the bulk of our future growth is anticipated to be in the oil sands,we also expect significant near-term growth in conventional oil production.shaunavon and Bakken are early stage development opportunities that have huge potential and which were growing rapidly.Weve also succes

217、sfully extended the life of our Weyburn project by at least 30 years thanks to the improvements weve made over time to enhance the oil recovery of the field.2011 HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011Oil production Mbbls/d50040030020010002010 2021F 2015FVolumes are shown before royalties and n

218、et to Cenovus.2012F based on midpoints of December 7,2011 guidance document.2013F through 2021F based on future price assumptions as noted in the Advisory.Forecast volumes are estimates only and subject to regulatory and partner approvals.See Advisory.7.4 million net acres of land across alBerta and

219、 saskatcheWan656 mmcf/d of natural gas produced 34%increase in Best estimate Bitumen economic contingent resources17%increase in total proved reserves134 mBBls/d net of oil and natural gas liquids produced352011 HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011 CELEBRATED FIRST OIL uPPER IMAgEour Christi

220、na lake team celebrated first oil at phase C in August.Christina lake is expected to reach a gross production capacity of 278,000 barrels per day by the end of 2019.13%oil sands production groWth POSITIONED FOR GROWTH IN GREATER PELICAN REGIONIn september,Pelican lake reached a major milestone achie

221、ving 100 million barrels of production since start up.Were undertaking a multi-year plan to increase drilling at Pelican lake,with production expected to reach about 55,000 barrels per day by the end of 2016.ExPANDED NISKU YARD CEntRE IMAgEWe expanded our module assembly yard in nisku,Alberta,to bet

222、ter support construction activity at our oil sands projects.By increasing the site from 32 to 45 acres we doubled our construction capacity at the facility.million spent doing Business With local and aBoriginal companies in our operating communities INVESTED IN EARLY-STAGE ENVIRONMENTAL TECHNOLOGIES

223、We invested about$6.5 million through our Environmental opportunity Fund(EoF)in two innovative Canadian technology companies.general Fusion Inc.is developing nuclear fusion technology to generate cheap,safe and plentiful energy without greenhouse gas emissions,pollution or radioactive waste.saltwork

224、s technologies Inc.has developed a series of low cost,energy desalination technologies that can be powered by solar or waste heat.the EoF invests in third-party entrepreneurs developing early-stage technologies focused on renewable and alternative energy as well as environmentally-driven improvement

225、s for our oil and gas operations.INCREASED PRODUCTION IN TIGHT OIL PLAY loWER IMAgEtight oil is oil thats located in a reservoir with extremely low permeability which means the oil is trapped in the reservoir.We more than doubled production at our lower shaunavon property to 2,000 barrels of oil per

226、 day.our Bakken operation had average oil production of more than 1,500 barrels per day,including royalty interest volumes.aBout$740groWing value Bymeeting our commitments3636362011 HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011 IMPROVED SAFETY PERFORMANCE uPPER IMAgEour Weyburn operation reached a ma

227、jor safety milestone 20 years without an employee lost-time incident.safety is a core value at Cenovus.Across the company our capital spending and operational activity increased,yet we continued to improve our safety performance.RELEASED FIRST CORPORATE RESPONSIBILITY REPORT our first report,publish

228、ed in July,offers insights on how our company is living up to our Corporate Responsibility Policy and to the commitments weve made in key areas,including focusing on the health and safety of employees and the communities where we live and work;advancing environmental stewardship;ensuring good govern

229、ance and transparency through reporting;engaging with stakeholders;and providing open and honest disclosure.the report provided a benchmark for us to document our achievements and identify ways to continually improve.We expect to release our 2011 report in mid-2012.Recognized as a leader in sustaina

230、bility 2011 Dow Jones sustainability Index(DJsI)north America Carbon Disclosure leadership Index(CDlI)for Canada for our leadership in emissions reporting COMMERCIALIzED NEW TECHNOLOGYWe commercialized our blowdown boiler technology in 2011,which is used to create steam at our oil sands projects.lea

231、rn more about the technology(page 22/23 foldout).CONFIRMED THAT CO2 REMAINS UNDERGROUND AT WEYBURN OPERATION loWER IMAgEWe commissioned a site assessment near our Weyburn operations to evaluate whether carbon dioxide(Co2)in the soil and other reported concerns at a nearby property were a result of o

232、ur enhanced oil recovery operations.third-party research studies confirmed the Co2 we inject at our Weyburn operation is not linked to Co2 concentrations in the soil.RESPONDED TO NATURAL DISASTERS In late spring,communities close to our operations in Alberta and saskatchewan were devastated by wildf

233、ires and flooding.the events impacted production at our Pelican lake heavy oil operation in northern Alberta and at our conventional operations in southern saskatchewan.In each instance,our employees worked diligently to safely and effectively bring operations back up.We also made a donation to the

234、Canadian Red Cross and our staff volunteered with relief efforts in both provinces.372011 HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011 CONTRIBUTED TO DEVELOPMENT OF COSIAWe were a key participant in the development of Canadas oil sands Innovation Alliance(CosIA)an innovative,environment-focused enti

235、ty formed by producers of Canadas oil sands.Cenovus is committed to CosIAs vision to enable responsible and sustainable growth of Canadas oil sands while delivering accelerated improvement in environmental performance through collaborative action and innovation.MADE A DIFFERENCE IN THE COMMUNITY We

236、contributed a total of$13 million to more than 800 organizations as part of our commitment to giving back as an Imagine Canada Caring Company.our employees also contributed more than$1 million through our annual employee giving campaign,Thanks&Giving,which the company matched.MET WITH STAKEHOLDERS u

237、PPER IMAgE meetings and open houses to consult With stakeholders CONDUCTED FIRST EMPLOYEE SURVEY our first survey showed employees are highly engaged and enabled to do their jobs well.83%of employees provided feedback 94%of employees have an understanding of our strategy and goals 94%of employees be

238、lieve we are committed to providing a safe and healthy work environment INCREASED WORKFORCE TO SUPPORT GROWTHWe developed a 10-year workforce plan and added more than 700 people to ensure we have the right teams in place,in both our office and field locations,to execute on our growth plans.HEARD FRO

239、M STAKEHOLDERSAs a follow-up to an extensive telephone survey we did in 2010,we conducted a shorter survey in 2011 to hear what people think about our business and operations,and the oil and gas industry in general.those who were familiar with us generally had positive impressions of how we conduct

240、our business,our safety practices,and our commitment to and involvement in the community.We plan to conduct a comprehensive survey every two years,and a shorter survey in alternate years.RECEIVED SPECIAL THANK YOU loWER IMAgEWe developed a new partnership with Ronald McDonald House and donated$1 mil

241、lion for initiatives in Edmonton,Calgary and Red Deer.160 groWing value Bymeeting our commitments38MESSAGE FROM OUR PRESIDENT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPoRt 201138MESSAGE FROM OUR PRESIDENT&CHIEF ExECUTIVE OFFICER CEnovus EnERgy AnnuAl REPoRt 2011382011 HIGHLIGHTS CEnovus EnERg

242、y AnnuAl REPoRt 2011 SHOWCASED OUR SITES uPPER IMAgEWe hosted dozens of tours to Foster Creek,Christina lake and Weyburn for national and international media,government representatives,community stakeholders,members of the investment community and employees.PROVIDED INTERACTIVE LEARNING OPPORTUNITIE

243、S CEntRE IMAgEEmployees learned about our operations and business strategy in a variety of ways including through company-wide forums and the use of interactive tools.INCREASED AWARENESS OF CENOVUSWe met regularly with various stakeholders,reported on our performance and reached out to the broader p

244、ublic through advertising,and traditional and social media.meetings With shareholders and the investment community in canada,the u.s.and across europe1,000,000 hits on 1,300 folloWers on tWitter ASSESSED IMPACT OF OUR ADSour research showed that our advertising has been successful in increasing posi

245、tive perception of the oil sands.seventy-two percent of those surveyed,who remembered seeing at least two of our ads,had a more positive attitude about the oil sands.PLANNED FOR FUTURE DEVELOPMENT loWER IMAgEA team of Cenovus staff and third-party environmental consultants visited Christina lake to

246、see how were collecting baseline environmental data for regulatory applications and future project development.the data we collect on soil,vegetation,plants,trees,wildlife and water factors into how we design protective measures and future land reclamation plans.320preserving value Byto the sharehol

247、ders:For Cenovus,2011 was all about building on a strong foundation to create value for shareholders.value creation is an apt theme for Cenovuss second annual report.It captures the essence of what was planned,what was accomplished,what was delivered and what lies ahead.Cenovuss strategic goals lay

248、out the plan in broad terms and the five key areas of focus,enumerated in Brians letter,identify where the company is prioritizing its efforts.strong results for 2011 demonstrate what was accomplished and provide a glimpse of what lies ahead.the years total return to shareholders well above the peer

249、 group average quantifies what was delivered.your Board fully supports the companys strategy and is pleased the Executive team has chosen value as their ultimate measure of success.We believe doing so will help them develop a better understanding of the type of opportunities where the company can ad

250、d significant value and set appropriate priorities.It will help us assess their choices and judge the results.using value as a lens has already sharpened our focus on all elements of value creation including resources,reserves,production,transportation,refining and marketing.It is helping us gain a

251、better understanding of the companys competitive strengths,clarify boundaries of its competitive advantage and evaluate trade-offs that need to be made.Additionally,a focus on value further illuminates the interplay between social responsibility,organizational structure,governance and compensation.A

252、s you know from last year,Cenovus was launched with a solid foundation comprising high-quality physical assets and highly capable and experienced staff.your Board believes that Cenovuss assets are somewhat unique and its strategy is particularly well-suited to its assets.this years resources,reserve

253、s and production additions,and business execution,combined with its ability to generate cash,continue to demonstrate the companys potential.Cenovuss 2011 total shareholder return,which includes about$600 million in dividends and above peer average stock price performance in a tough market,demonstrat

254、es its ability to produce tangible value.All in all,we believe that Cenovus is doing an excellent job of building on a solid foundation to convert the large potential of its assets into realizable value for you,the shareholder.Respectfully submitted on behalf of the Board.Michael A.Grandin Board Cha

255、irensuring good governance39preserving value Byensuring good governance With years of business experience and a strong mix of skills,our Board of Directors oversees the management of our business,and is focused on preserving and increasing shareholder value.preserving value ByMESSAGE FROM OUR BOARD

256、CHAIR CEnovus EnERgy AnnuAl REPoRt 201140OPERATING AND FINANCIAL HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011Before Royalties 2011 2010%Change ProductionCrude oil and natural gas liquids(bbls/d)oil sands Heavy oil Foster Creek 54,868 51,147 7 Christina lake 11,665 7,898 48 total 66,533 59,045 13 Pel

257、ican lake 20,424 22,966 (11)86,957 82,011 6 Conventional liquids Heavy oil 15,657 16,659 (6)light and Medium oil 30,524 29,346 4 natural gas liquids 1,101 1,171 (6)total Crude oil and natural gas liquids(bbls/d)134,239 129,187 4 natural gas(MMcf/d)656 737 (11)Refinery Operations(1)Crude oil Capacity

258、(Mbbls/d)452 452 Crude oil Runs(Mbbls/d)401 386 4 Crude utilization(%)89 86 3 Proved Reserves(2)total Reserves(MMBoE)1,945 1,666 17 year-end Bitumen Reserves(MMbbls)1,455 1,154 26 total Production Replacement(%)422 398 6 Recycle Ratio(3)5.3 7.8 (32)Proved Finding and Development Costs($/BoE)(4)5.95

259、3.65 63 Reserve life Index(years)22 18 22(1)Represents 100%of the Wood River and Borger refinery operations.(2)natural gas is converted using a 6:1 oil equivalent.see the Advisory.(3)For additional information regarding our Recycle Ratio,see our 2012 Management Proxy Circular,available at .(4)Findin

260、g and Development Costs presented do not include changes in future development costs.For a description of the calculations used,refer to our Advisory.Finding and Development Costs calculated with changes in future development costs,for proved reserves and for proved plus probable reserves,are disclo

261、sed in the Advisory.operating highlights 41cenovusOPERATING AND FINANCIAL HIGHLIGHTS CEnovus EnERgy AnnuAl REPoRt 2011delivering value($millions,except per share and other amounts as noted)2011 2010%Change Revenues 15,696 12,641 24 Cash Flow(1)3,276 2,412 36 Per share Diluted 4.32 3.20 operating Ear

262、nings(1)1,239 799 55 Per share Diluted 1.64 1.06 net Earnings 1,478 1,081 37 Per share Diluted 1.95 1.43 Capital Investment 2,723 2,115 29 net Acquisition and Divestiture Activity (102)(221)net Capital Investment 2,621 1,894 38 Dividends Per Common share($/share)0.80 0.80 Dividend yield(2)2.36 2.40

263、Debt to Capitalization(%)(1)27 29 Debt to Adjusted EBItDA(times)(1)1.0 1.3 (1)non-gAAP measures as referenced in the Advisory.(2)Based on tsX closing share price at year end.financial highlights“The success we achieved in 2011 is a direct result of the consistent,predictable and reliable approach we

264、 take to growing value for our shareholders.Despite the challenging economic environment,our financial results were stronger in 2011 than the previous year and we grew our oil production as well as substantially added to our reserves and contingent resources,which contributed to an increased net ass

265、et value.Were well-positioned for another successful year in 2012.”Brian Ferguson President&Chief Executive officer42MANAGEMENTS DISCUSSION AND ANALYSIS CEnovus EnERgy AnnuAl REPoRt 2011Managements discussion and analysisthis Managements Discussion and Analysis(“MD&A”)for Cenovus Energy Inc.,dated F

266、ebruary 15,2012,should be read with our audited Consolidated Financial statements and accompanying notes for the year ended December 31,2011(“Consolidated Financial statements”).this MD&A contains forward-looking information about our current expectations,estimates and projections.For information on

267、 the risk factors that could cause actual results to differ materially and the assumptions underlying our forward-looking information,as well as definitions used in this MD&A,see the Advisory.Management is responsible for preparing the MD&A,while the Audit Committee of the Cenovus Board of Directors

268、(the“Board”)reviews the MD&A and recommends its approval by the Board.this MD&A and the Consolidated Financial statements and comparative information have been prepared in Canadian dollars,except where another currency has been indicated.Effective January 1,2011,we adopted International Financial Re

269、porting standards(“IFRs”)as issued by the International Accounting standards Board.For all periods up to and including the year ended December 31,2010,we prepared our Consolidated Financial statements in accordance with Canadian generally accepted accounting principles(“previous gAAP”).In accordance

270、 with the standard related to the first time adoption of IFRs(“IFRs 1”),our transition date to IFRs was January 1,2010 and therefore the 2011 and 2010 information has been prepared in accordance with IFRs.the 2009 financial information contained within this MD&A has been prepared following previous

271、gAAP and,as allowed by IFRs 1,has not been re-presented in accordance with IFRs.Production volumes are presented on a before royalties basis.Certain amounts in prior years have been reclassified to conform to the current years IFRs presentation format.For the Year Ended December 31,2011Introduction

272、and Overview of Cenovus Energy.43Overview of 2011.44Financial Information.49Results of Operations.55Reportable Segments.57oil sands.57Conventional.61Refining and Marketing.65Corporate and Eliminations.66Quarterly Information.69Oil and Gas Reserves and Resources.71Liquidity and Capital Resources.73Ri

273、sk Management.77Transparency and Corporate Responsibility.81Accounting Policies and Estimates.82Outlook.8543managements discussion and analysis cenovus energy annual report 2011DELIVERING VaLuEcenovusWe are a canadian oil company headquartered in calgary,alberta,with our shares trading on the toront

274、o and new york stock exchanges.on December 31,2011,we had a market capitalization of approximately$26 billion.We are in the business of developing,producing and marketing crude oil,natural gas and natural gas liquids(“ngls”)in canada with refining operations in the united states.our total 2011 avera

275、ge crude oil and ngls production was in excess of 134,000 barrels per day and our average natural gas production was in excess of 650 MMcf per day.our operations include oil sands projects in northern alberta,including Foster creek and christina lake.these two properties,which we operate and have a

276、50 percent ownership interest in,are located in the athabasca region and use steam-assisted gravity drainage(“sagD”)to extract crude oil.also located within the athabasca region is our wholly owned pelican lake property,where we have an enhanced oil recovery project using polymer flood technology,as

277、 well as our emerging grand rapids sagD project.In southern saskatchewan,we inject carbon dioxide to enhance oil recovery at our Weyburn operation and are also developing our Bakken and lower shaunavon tight oil plays.We also have established conventional crude oil and natural gas production in albe

278、rta.In addition to our upstream assets,we have 50 percent ownership in two refineries located in Illinois and texas,u.s.,enabling us to partially integrate our operations from crude oil production through to refined products such as gasoline,diesel and jet fuel,to mitigate the volatility associated

279、with commodity price movements.our operational focus is to increase crude oil production,predominantly from Foster creek,christina lake,pelican lake and our tight oil opportunities in saskatchewan,and to continue the assessment of our emerging resource base.We have proven our expertise and low cost

280、oil sands development approach.our conventional natural gas production base is expected to generate reliable production and cash flow which will enable further development of our crude oil assets.In all of our operations,whether crude oil or natural gas,technology plays a key role in improving the w

281、ay we extract the resources,increasing the amount recovered and reducing costs.cenovus has a knowledgeable,experienced team committed to innovation.We embed environmental considerations into our business with the objective to ultimately lessen our environmental impact.We are advancing technologies t

282、hat reduce the amount of water,natural gas and electricity consumed in our operations and minimize surface land disturbance.our strategy is to focus on the development of our substantial crude oil resources in alberta and saskatchewan.our future opportunities are primarily based on the development o

283、f the land position that we hold in the athabasca region in northern alberta and we plan to continue assessing our emerging resource base by drilling approximately 450 stratigraphic test wells each year for the next five years.In addition to our Foster creek and christina lake oil sands projects,the

284、 next three emerging projects that we expect to develop in this area as well as our current ownership interests are as follows:In June 2010,we submitted a joint application and environmental Impact assessment(“eIa”)for our narrows lake property,which is located within the christina lake region.this

285、project is expected to have a gross production capacity of 130,000 barrels per day and be developed in up to three phases.provided all regulatory requirements are met we anticipate receiving regulatory approval in the middle of 2012 with first production expected in 2016.at our 100 percent owned gra

286、nd rapids property,located within the greater pelican region,a sagD pilot project is underway.In December 2011,we filed a joint application and eIa for a commercial sagD operation.the proposed project is expected to have a gross production capacity of 180,000 barrels per day.our 100 percent owned te

287、lephone lake property is located within the Borealis region and in December 2011,we submitted a revised joint application and eIa.the telephone lake project is now expected to have an initial gross production capacity of 90,000 barrels per day.We have a number of opportunities to deliver shareholder

288、 value,predominantly through production growth from our resource position in the oil sands and tight oil opportunities.our business plan targets growing our net oil sands production to approximately 400,000 barrels per day by the end of 2021.By the end of 2016,we are also targeting crude oil product

289、ion from pelican lake of 55,000 barrels per day as well as 65,000 to 75,000 barrels per day from our conventional oil operations in saskatchewan and southern alberta.In addition,we plan to assess the potential of new crude oil projects on our existing lands and new regions with a focus on tight oil

290、opportunities.We are targeting total net crude oil production of approximately 500,000 barrels per day by the end of 2021.ownership Interestnarrows lake 50 percent(1)grand rapids 100 percenttelephone lake 100 percent(1)approximate ownership interestIntroductIon And overvIew of cenovus energy 44manag

291、ements discussion and analysis cenovus energy annual report 2011to achieve these production targets,we expect our total annual capital investment to average between$3.0 and$3.5 billion for the next decade.this capital investment is expected to be primarily internally funded through cash flow generat

292、ed from our crude oil,natural gas and refining operations as well as prudent use of balance sheet capacity.our natural gas production provides a reliable stream of operating cash flow and acts as an economic hedge for the natural gas required as a fuel source at both our upstream and refining operat

293、ions.our refineries,which are operated by conocophillips,an unrelated u.s.public company,enable us to moderate commodity price cycles by processing heavy oil,thus economically integrating our oil sands production.as part of our risk management program,we employ commodity hedging to enhance cash flow

294、 certainty.In addition to our strategy of growing net asset value,we expect to continue to pay meaningful and growing dividends as part of delivering a strong total shareholder return over the long-term.our BusIness structureour reportable segments are as follows:Oil Sands,which consists of cenovuss

295、 producing bitumen assets at Foster creek and christina lake,heavy oil assets at pelican lake,new resource play assets such as narrows lake,grand rapids and telephone lake,and the athabasca natural gas assets.certain of the companys operated oil sands properties,notably Foster creek,christina lake a

296、nd narrows lake,are jointly owned with conocophillips.Conventional,which includes the development and production of conventional crude oil,natural gas and ngls in alberta and saskatchewan,notably the carbon dioxide enhanced oil recovery project at Weyburn,and the Bakken and lower shaunavon crude oil

297、 properties.Refining and Marketing,which is focused on the refining of crude oil products into petroleum and chemical products at two refineries located in the u.s.the refineries are jointly owned with and operated by conocophillips.this segment also markets cenovuss crude oil and natural gas,as wel

298、l as third-party purchases and sales of product that provide operational flexibility for transportation commitments,product type,delivery points and customer diversification.Corporate and Eliminations,which primarily includes unrealized gains and losses recorded on derivative financial instruments,g

299、ains and losses on divestiture of assets,as well as other cenovus-wide costs for general and administrative,and financing activities.as financial instruments are settled,the realized gains and losses are recorded in the operating segment to which the derivative instrument relates.eliminations relate

300、 to sales and operating revenues and purchased product between segments recorded at transfer prices based on current market prices and to unrealized intersegment profits in inventory.overvIew of 2011In 2011,we achieved the milestones that we set for the year.We completed our planned capital programs

301、,met or exceeded our production targets,kept our capital and operating costs in line with expectations and ended the year in a stronger financial position than we started.In the third quarter,phase c at christina lake achieved first production ahead of schedule and capital expenditures below budget

302、for the entire phase.We have accelerated planned first production from phases D and e at christina lake to commence in the fourth quarters of 2012 and 2013,respectively each about six months earlier than originally expected.this acceleration results from a combination of capital execution efficienci

303、es at both the nisku module yard and at the construction site,as well as the application of new start up technologies and well design.construction of the coker and start up activities of the coker and refinery expansion(“core”)project at the Wood river refinery were completed with total capital cost

304、s of us$3.8 billion(us$1.9 billion net to cenovus),within 10 percent of its original budget.Demonstrating our strong resource base,our total bitumen,crude oil and ngls proved reserves increased 22 percent to over 1.7 billion barrels and our best estimate bitumen economic contingent resources increas

305、ed 34 percent to 8.2 billion barrels.our operational performance in 2011 and consistent crude oil growth have increased our net asset value and we expect to reach our goal of doubling our December 2009 net asset value by the end of 2015.OPERATIONAL RESULTSour average crude oil and ngls production in

306、creased four percent to 134,239 barrels per day compared to 2010,primarily due to the start of production from phase c at christina lake in the third quarter of 2011,improved well performance and plant efficiency at Foster creek as well as increased production from our lower shaunavon tight oil play

307、.these production increases were partially offset by operational challenges including wet weather and flooding in southern saskatchewan and alberta and wild fires in northern alberta which temporarily curtailed production at pelican lake.our December 2011 average crude oil and ngls production was 15

308、0,977 barrels per day,up 18 percent from the prior year.45managements discussion and analysis cenovus energy annual report 2011DELIVERING VaLuEcenovusat christina lake we received regulatory approval from the alberta energy resources conservation Board(“ercB”)for expansion phases e,F and g.this expa

309、nsion approval,as well as the positive delineation results,added 270 million barrels of proved bitumen reserves.our best estimate bitumen economic contingent resources increased 2.1 billion barrels or approximately 34 percent from 2010.the substantial increase was primarily due to successful stratig

310、raphic test well drilling,resulting in the conversion of prospective resources to contingent resources.In the fourth quarter of 2011,we completed coker construction and start up activities of the core project at the Wood river refinery.core capital expenditures were approximately us$3.8 billion(us$1

311、.9 billion net to cenovus),10 percent higher than originally budgeted.structured test runs undertaken to date have been successful,and a five percent increase to clean product yield has been achieved.testing will continue through the first quarter of 2012,and the Wood river refinerys total heavy cru

312、de oil processing capacity is expected to increase to between 200,000 to 220,000 barrels per day,enhancing our ability to integrate our growing bitumen production.other significant 2011 operational results compared to 2010 include:Foster creek production averaging 54,868 barrels per day,an increase

313、of seven percent from 2010;christina lake production averaging 11,665 barrels per day,an increase of 48 percent from 2010 and ended 2011 producing approximately 23,000 barrels per day;lower shaunavon average production more than doubling to 2,041 barrels per day;pelican lake production averaging 20,

314、424 barrels per day,a decrease of 11 percent partly due to the temporary curtailment of production due to wild fires in the area which decreased production by approximately 500 barrels per day,a scheduled turnaround which reduced production by approximately 300 barrels per day and expected natural d

315、eclines;Drilling 491 gross stratigraphic test wells,mainly in the first quarter,to support the next phases of expansion at Foster creek and christina lake,gather data on the quality of our emerging projects and support regulatory applications;commencing the regulatory approval process for two of our

316、 emerging projects with the filing of a regulatory application for a commercial sagD operation at our grand rapids property with an expected gross production capacity of 180,000 barrels per day and filing a revised regulatory application for telephone lake with an expected initial gross production c

317、apacity of 90,000 barrels per day.With these applications filed we have 400,000 barrels per day of gross production capacity in the regulatory process;applying for an amendment to the existing christina lake regulatory approval to add cogeneration facilities and increasing expected total gross produ

318、ction capacity by 10,000 barrels per day at each of phase F and phase g;receiving approval from the alberta Department of energy(“aDoe”)to include all previous capital investment for Foster creek expansion phases F,g and H as part of our existing Foster creek royalty calculation;receiving partner ap

319、proval for expansion phases F,g and H at Foster creek and expansion phase e at christina lake;and effectively managing the expected natural declines in our natural gas assets resulting in an absolute year over year production decline of 11 percent and a seven percent decrease,excluding the 2010 disp

320、ositions.While year over year production was down,production throughout 2011 remained relatively flat with low levels of capital investment.FINANCIAL RESULTSthroughout 2011,our financial results benefited from higher crude oil prices and a significant increase in refining crack spreads when compared

321、 to 2010.as a result of the increased crack spreads,we saw substantially improved operating cash flow from our refining and Marketing segment.the higher average crude oil prices improved operating cash flow from our crude oil and ngls operations,although price had a negative impact on our royalty ex

322、pense as the canadian dollar WtI price is used to calculate the royalty rates at our oil sands operations.the financial highlights for 2011 compared to 2010 include:revenues increasing$3,055 million,or 24 percent,primarily due to increased crude oil and ngls production,improved refined product price

323、s,a 16 percent increase in the average sales price for crude oil and ngls,excluding financial hedging,higher condensate prices and volumes used for blending partially offset by decreased natural gas volumes and average sales prices;operating cash flow of$981 million from refining and Marketing,an in

324、crease of$905 million,primarily due to higher refining margins that resulted from both higher refined product pricing and discounted crude oil feedstock costs;cash flow of$3,276 million,increasing 36 percent,primarily due to the significant increase in operating cash flow from refining and Marketing

325、 and improved crude oil and ngls production and average sales price;our conventional natural gas operations generating$623 million of operating cash flow in excess of the related capital investment,which partially funded the further development of our crude oil projects;46managements discussion and

326、analysis cenovus energy annual report 2011 operating earnings increasing 55 percent or$440 million,primarily due to higher operating cash flow partially offset by increased general and administrative and income tax expenses(excluding deferred tax on the gains and losses on unrealized risk management

327、,non-operating foreign exchange and divestitures);receiving approval from the aDoe to include all previous capital investment for Foster creek expansion phases F,g and H as part of our existing Foster creek royalty calculation resulting in a one-time reduction in royalty expense of approximately$65

328、million;and paying a quarterly dividend of$0.20 per share.STRATEGIC PLAN UPDATEIn 2011,we provided an update to our 10 year strategic plan with a focus on doubling our net asset value between 2010 and 2015.to achieve this goal our 10 year strategic plan now targets:expected gross production capacity

329、 at Foster creek,including phases F,g and H as well as future phases,of between 290,000 to 310,000 barrels per day,an increase of 55,000 to 75,000 barrels per day from the original estimate;selected Benchmark Prices and exchange rates 2011 Q4 Q3 Q2 Q1 2010 Q4 Q3 Q2 Q1 2009Crude Oil Prices(US$/bbl)We

330、st texas Intermediate(WtI)average 95.11 94.06 89.54 102.34 94.60 79.61 85.24 76.21 78.05 78.88 62.09 end of period 98.83 98.83 79.20 95.42 106.72 91.38 91.38 79.97 75.63 83.45 79.36 Western canadian select(Wcs)average 77.96 83.58 71.92 84.70 71.74 65.38 67.12 60.56 63.96 69.84 52.43 end of period 84

331、.37 84.37 69.38 75.32 91.37 72.87 72.87 64.97 61.38 70.25 71.84 average Differential WtI-Wcs 17.15 10.48 17.62 17.64 22.86 14.23 18.12 15.65 14.09 9.04 9.66 average condensate (c5 edmonton)105.34 108.74 101.48 112.33 98.90 81.91 85.24 74.53 82.87 84.98 61.35 average Differential WtI-condensate(premi

332、um)/discount(10.23)(14.68)(11.94)(9.99)(4.30)(2.30)1.68(4.82)(6.10)0.74Refining Margin 3-2-1 Average Crack Spreads(US$/bbl)chicago 24.55 19.23 33.35 29.00 16.62 9.33 9.25 10.34 11.60 6.11 8.54 Midwest combined(group 3)25.26 20.75 34.04 27.19 19.04 9.48 9.12 10.60 11.38 6.82 8.09Natural Gas Average P

333、rices aeco($/GJ)3.48 3.29 3.53 3.54 3.58 3.91 3.39 3.52 3.66 5.08 3.92 nyMeX(US$/MMBtu)4.04 3.55 4.19 4.31 4.11 4.39 3.80 4.38 4.09 5.30 3.99 Basis Differential nyMeX-aeco(US$/MMBtu)0.31 0.17 0.34 0.42 0.29 0.40 0.28 0.78 0.32 0.19 0.40U.S./Canadian Dollar Exchange Rate average 1.012 0.978 1.020 1.033 1.015 0.971 0.987 0.962 0.973 0.961 0.876 accelerating the timelines for production at Foster c