Cenovus Energy Inc (CVE) 2024年年度報告「TSX」.pdf

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1、ANNUAL REPORT2024For additional information about forwardlooking statements,specified financial measures and reserves contained in this Annual Report,see the Advisory on page 132.Message from our President&Chief Executive Officer3Managements Discussion and Analysis4Consolidated Financial Statements6

2、8Notes to Consolidated Financial Statements77 Supplemental information125Advisory132Information for shareholders149 TABLE OF CONTENTSAt Cenovus,our purpose is to energize the world to make peoples lives better.CENOVUS ENERGY 2024 ANNUAL REPORT|3Cenovus achieved significant operational and financial

3、milestones in 2024,marking a year of solid performance and meaningful returns to our shareholders.Our continued focus on operational efficiency,safety and financial discipline has ensured we are well-positioned for future growth and to navigate the evolving energy landscape.At the core of our succes

4、s is safety,which remains fundamental to everything we do.In 2024,we had our best-ever process safety performance,making us a top-quartile performer in this area a trend weve continued since 2022.Our financial discipline has resulted in one of the strongest balance sheets in our industry.Last year w

5、e met our$4.0 billion net debt target,enabling us to return 100%of excess free funds flow to shareholders,over and above our regular dividends.In 2024,we had$3.2 billion of cash returns to our common and preferred shareholders in the form of base and variable dividends,common share purchases,and thr

6、ough preferred share redemptions.Since 2021,the companys total shareholder returns on a relative basis have outperformed the S&P/TSX composite and energy indices by 144%and 50%respectively.Our financial performance is driven by operational excellence in our Upstream operations,with daily and annual

7、production records at our Oil Sands operations.2024 marked the first year our U.S.Downstream network was fully operational,and were moving quickly to make that business competitive and profitable.Throughput,utilization and costs are all trending positively,and Im pleased with the work underway to fu

8、rther strengthen this part of the business.Mid-to late 2025 will mark a significant inflection point for our company.Our capital spending decreases as we complete a number of growth projects,and we begin to see the first of our 150,000 barrels per day of growth.All our key growth projects remain on

9、track towards completion and are expected to result in a material rate of change in our free cash flow through 2026 and beyond.This free cash flow profile,along with our strong balance sheet,positions the company well to manage continued volatility in commodity prices,return cash to shareholders and

10、 strategically invest in the business.As we look to the future,we are focused on maintaining a competitive cost structure,through innovation,streamlining our operations foundational for our ability to grow and a strong balance sheet.Keeping our business robust is essential in this time of continuall

11、y evolving market dynamics.We know that Canadians,and the world,rely on the essential natural resources our industry provides.We are proud to advocate for our company and industry,sharing the benefits our sector responsibly delivers.I want to thank the shareholders,and our Board,employees and contra

12、ctors,for your ongoing support.I am looking forward to the significant year we have ahead.Message from our President&Chief Executive OfficerJon McKenzieKeeping our business robust is essential in this time of continually evolving market dynamics.4|CENOVUS ENERGY 2024 ANNUAL REPORTManagements Discuss

13、ion and Analysis(unaudited)For the year ended December 31,2024(Canadian dollars)This Managements Discussion and Analysis(“MD&A”)for Cenovus Energy Inc.(which includes references to“we”,“our”,“us”,“its”,the“Company”,or“Cenovus”,and means Cenovus Energy Inc.,the subsidiaries of,joint arrangements,and

14、partnership interests held directly or indirectly by,Cenovus Energy Inc.)dated February 19,2025,should be read in conjunction with our December 31,2024 audited Consolidated Financial Statements and accompanying notes(“Consolidated Financial Statements”).All of the information and statements containe

15、d in this MD&A are made as at February 19,2025,unless otherwise indicated.This MD&A contains forward-looking information about our current expectations,estimates,projections and assumptions.See the Advisory for information on the risk factors that could cause actual results to differ materially and

16、the assumptions underlying our forward-looking information.Cenovus management(“Management”)prepared the MD&A.The Audit Committee of the Cenovus Board of Directors(“the Board”),reviewed and recommended the MD&A for approval by the Board,which occurred on February 19,2025.Additional information about

17、Cenovus,including our quarterly and annual reports,Annual Information Form(“AIF”)and Form 40-F,is available on SEDAR+at sedarplus.ca,on EDGAR at sec.gov and on our website at .Information on or connected to our website,even if referred to in this MD&A,do not constitute part of this MD&A.Cenovus hold

18、s equity ownership interests in a number of joint ventures,as classified under IFRS Accounting Standards,that are accounted for using the equity method in our Consolidated Financial Statements.Unless otherwise indicated,operational results of these joint ventures are not reflected in this MD&A.For f

19、urther information,see the Advisory.Basis of PresentationThis MD&A and the Consolidated Financial Statements were prepared in Canadian dollars(which includes references to“dollar”or“$”),except where another currency is indicated,and in accordance with International Financial Reporting Standards(“IFR

20、S”)as issued by the International Accounting Standards Board(“IASB”)(the“IFRS Accounting Standards”).Production volumes are presented on a before royalties basis.Refer to the Abbreviations and Definitions section of the Advisory for commonly used oil and gas terms.Overview of Cenovus5Year in review5

21、Operating and financial results8Commodity prices underlying our financial results13Outlook16Reportable segments19Upstream 19Oil Sands19Conventional24Offshore26Downstream 30Canadian Refining30U.S.Refining31Corporate and eliminations34Quarterly results36Oil and gas reserves39Liquidity and capital reso

22、urces40Risk management and risk factors45Critical accounting judgments,estimation uncertainties and accounting policies64Control environment67OVERVIEWOFCENOVUSWeareaCanadian-basedintegratedenergycompanyheadquarteredinCalgary,Alberta.WeareoneofthelargestCanadian-basedcrudeoilandnaturalgasproducers,wi

23、thupstreamoperationsinCanadaandtheAsiaPacificregion,andoneofthelargestCanadian-basedrefinersandupgraders,withdownstreamoperationsinCanadaandtheUnitedStates(“U.S.”).OurupstreamoperationsincludeoilsandsprojectsinnorthernAlberta;thermalandconventionalcrudeoil,naturalgasandnaturalgasliquids(“NGLs”)proje

24、ctsacrossWesternCanada;crudeoilproductionoffshoreNewfoundlandandLabrador;andnaturalgasandNGLsproductionoffshoreChinaandIndonesia.OurdownstreamoperationsincludeupgradingandrefiningoperationsinCanadaandtheU.S.,andcommercialfueloperationsacrossCanada.Ouroperationsinvolveactivitiesacrossthefullvaluechai

25、ntodevelop,produce,refine,transportandmarketcrudeoil,naturalgasandrefinedpetroleumproductsinCanadaandinternationally.Ourphysicallyandeconomicallyintegratedupstreamanddownstreamoperationshelpusmitigatetheimpactofvolatilityinlight-heavycrudeoilpricedifferentialsandcontributetoournetearningsbycapturing

26、valuefromcrudeoil,naturalgasandNGLsproductionthroughtothesaleoffinishedproductssuchastransportationfuels.ForadescriptionofourbusinesssegmentsseetheReportableSegmentssectionofthisMD&A.OurStrategyAt Cenovus,our purpose is to energize the world to make peoples lives better.Our strategy is focused on ma

27、ximizingshareholdervalueoverthelong-termthroughsustainable,low-cost,diversifiedandintegratedenergyleadership.Ourfivestrategicobjectivesinclude:deliveringtop-tiersafetyperformanceandsustainabilityleadership;maximizingvaluethroughcompetitivecoststructuresandoptimizingmargins;afocusonfinancialdisciplin

28、e,includingmaintainingtargeteddebtlevelswhilepositioningCenovusforresiliencythroughcommoditypricecycles;adisciplinedapproachtoallocatingcapitaltoprojectsthatgeneratereturnsatthebottomofthecommoditypricecycle;andabsoluteandpersharefreefundsflowgrowth.OnDecember12,2024,wereleasedour2025corporateguidan

29、cewhichfocusedondisciplinedcapitalallocationinsupportofincreasingshareholderreturnsovertime.Wewillcontinuetobefocusedoncontrollingcosts,improvingtheprofitabilityofourstrategicdownstreambusinessandoptimizingouradvantagedportfoliotodelivervalueforourshareholders.Forfurtherdetails,seetheOutlooksectiono

30、fthisMD&Aandour2025corporateguidancedatedDecember11,2024,.YEARINREVIEWOverall,our2024resultsreflectstrongoperationalperformanceintheupstreambusiness,steadyperformanceinourCanadianRefining business and improving performance in the U.S.Refining business.Constructive crude oil prices,including thenarro

31、wingofthelight-heavypricedifferential,benefitedourupstreamfinancialresultswhiledecliningmarketcrackspreadsalongwiththenarrowingoftheWTI-WCSandupgradingdifferentialshadasignificantimpactonourdownstreamOperatingMargin.Inaddition,we:Deliveredsafeandreliableupstreamperformance.Upstreamproductionaveraged

32、797.2thousandBOEperday,comparedwith778.7thousandBOEperdayin2023,primarilydrivenbystrongperformancefromourOilSandsassets.OilSandsproductionaveraged610.7thousandBOEperday,ourhighest-everannualproduction,comparedwith595.4thousandBOEperdayin2023.Theincreaseinproductionisattributedtosuccessfulresultsfrom

33、ourredevelopment,sustaining,growthandoptimizationprograms.AchievedOffshoremilestones.WeprogressedtheWestWhiteRoseprojectandareontracktodeliverfirstoilin2026.Theprojectisapproximately88percentcompleteandmechanicalcompletionofthetopsidesandconcretegravitystructureoccurredinthefourthquarter.Refitworkon

34、theSeaRosefloatingproduction,storageandoffloading(“FPSO”)vesselwascompletedandthevesselreturnedtothefieldinNovember.TheSeaRoseFPSOisonstationandreconnectedtotheWhiteRosefield.ProductionisexpectedtoresumelateFebruary2025.AdvancedourOilSandsgrowthprojects.Weachievedsignificantmilestonesonourmajorupstr

35、eamgrowthprojectsincludingmechanicalcompletionoftheNarrowsLakepipelinetoChristinaLake,bringingthreewellpadsonlineaspartoftheSunrisegrowthprogramandprogressingconstructionoftheFosterCreekoptimizationproject,whichwasapproximately64percentcompleteasatDecember31,2024.AtourLloydminsterconventionalheavyoi

36、lassets,wecontinuetoprogressourplanneddrillingprogram.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis3CENOVUS ENERGY 2024 ANNUAL REPORT|5Improved U.S.Refining throughput and refined product production.Average crude oil unit throughput(or“throughput”)increased96.7thousandbarrelsperdaycomparedwi

37、th2023,to556.4thousandbarrelsperdayin2024.Refinedproductproductionaveraged590.0thousandbarrelsperday,anincreaseof105.0thousandbarrelsperdayfrom2023.Theincreasesinthroughputandrefinedproductproductionweremainlydrivenbyafullyearofproduction at the Toledo and Superior refineries combined with improved

38、reliability across our U.S.Refiningoperations.Safelycompletedsignificantturnarounds.IntheCanadianRefiningsegment,wecompletedthelargestturnaroundintheassetshistoryattheLloydminsterUpgrader(“Upgrader”)thatranfromearlyMayuntilearlyJuly.IntheU.S.Refiningsegment,wecompletedasignificantturnaroundattheLima

39、Refineryaswellasaturnaroundatournon-operatedBorgerRefinery.Inourupstreamoperations,wecompletedturnaroundsatChristinaLakeandatcertainConventionalassets.Generatedcashfromoperatingactivitiesof$9.2billion.Cashfromoperatingactivitiesincreasedby$1.8billioncomparedwith2023.AdjustedFundsFlowwas$8.2billion,a

40、decreaseof$639millioncomparedwith2023,reflectingweakermarketcrackspreadsthatimpactedourdownstreamresults,partiallyoffsetbystrongupstreamperformanceduetohigherrealizedpricingandincreasedsalesvolumes.TheChicago3-2-1crackspreaddeclined31percenttoUS$16.74perbarrelcomparedwith2023.Increasedourtargetretur

41、nstoshareholders.OnachievingourNetDebttarget,inthethirdquarterweincreasedtargetreturnstoshareholders,stewardingto100percentofExcessFreeFundsFlowovertime.Intheyear,wereturned$3.2billiontocommonandpreferredshareholders,comprisingthepurchaseof55.9millioncommonsharesfor$1.4billionthroughournormalcoursei

42、ssuerbid(“NCIB”),$1.5billionthroughcommonsharebaseandvariabledividends,$45millionthroughpreferredsharedividendsandtheredemptionofall10.0millionoftheCompanysseries3preferredsharesatapriceof$25.00pershare,foratotalof$250million.Raisedourcommonsharebasedividend.Beginninginthesecondquarter,theBoardappro

43、veda29percentincreaseinthebasedividendto$0.720percommonshareannually.OnFebruary19,2025,theBoarddeclaredafirstquarterbasedividendof$0.180percommonshare.Upgradedcreditratings.Weachievedourmid-BBBcreditratingstargetwithallagencies,followingS&PGlobalsupgrade of Cenovus to BBB with a Stable outlook on Ma

44、rch 18,2024.This upgrade is a reflection of our debtreduction,financialpolicytrackrecordandoperationalmomentum.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis46|CENOVUS ENERGY 2024 ANNUAL REPORTSummaryofAnnualResults($millions,exceptwhereindicated)202420232022UpstreamProductionVolumes(1)(MBOE/

45、d)797.2778.7786.2DownstreamTotalProcessedInputs(2)(3)(Mbbls/d)678.0586.8513.0CrudeOilUnitThroughput(2)(Mbbls/d)646.9560.4493.7DownstreamProductionVolumes(Mbbls/d)693.1599.2525.1Revenues54,27752,20466,897OperatingMargin(4)10,80911,02214,263OperatingMarginUpstream(5)11,1219,87011,824OperatingMarginDow

46、nstream(5)(312)1,1522,439CashFrom(UsedIn)OperatingActivities9,2357,38811,403AdjustedFundsFlow(4)8,1648,80310,978PerShareBasic(4)($)4.414.645.63PerShareDiluted(4)($)4.384.545.47CapitalInvestment5,0154,2983,708FreeFundsFlow(4)3,1494,5057,270NetEarnings(Loss)3,1424,1096,450PerShareBasic($)1.682.153.29P

47、erShareDiluted($)1.672.093.20TotalAssets56,53953,91555,869TotalLong-TermLiabilities(4)19,40818,99320,259Long-TermDebt,IncludingCurrentPortion7,5347,1088,691NetDebt4,6145,0604,282CashReturnstoCommonandPreferredShareholders3,2462,7983,457CommonSharesBaseDividends1,255990682BaseDividendsPerCommonShare(

48、$)0.6800.5250.350CommonSharesVariableDividends251219VariableDividendsPerCommonShare($)0.1350.114PurchaseofCommonSharesUnderNCIB1,4451,0612,530PaymentforPurchaseofWarrants711DividendsPaidonPreferredShares453626PreferredShareRedemption250(1)RefertotheOperatingandFinancialResultssectionofthisMD&Aforasu

49、mmaryoftotalupstreamproductionbyproducttype.(2)RepresentsCenovussnetinterestinrefiningoperations.(3)Totalprocessedinputsincludecrudeoilandotherfeedstocks.Blendingisexcluded.(4)Non-GAAPfinancialmeasureorcontainsanon-GAAPfinancialmeasure.SeetheAdvisory.(5)Specifiedfinancialmeasure.SeetheSpecifiedFinan

50、cialMeasuresAdvisory.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis5CENOVUS ENERGY 2024 ANNUAL REPORT|7OPERATINGANDFINANCIALRESULTSSelectedOperatingandFinancialResultsUpstreamYearEndedDecember31,PercentChange20242023ProductionVolumesbySegment(1)(MBOE/d)OilSands610.7 3595.4Conventional119.9 11

51、9.9Offshore66.6 563.4TotalProductionVolumes797.2 2778.7ProductionVolumesbyProduct(1)Bitumen(Mbbls/d)591.3 3576.7HeavyCrudeOil(Mbbls/d)17.6 516.7LightCrudeOil(Mbbls/d)12.9(9)14.1NGLs(Mbbls/d)32.0(2)32.5ConventionalNaturalGas(MMcf/d)860.2 3832.6TotalProductionVolumes(MBOE/d)797.2 2778.7Per-UnitOperati

52、ngExpensesbySegment(2)($/BOE)OilSands11.40(9)12.54Conventional11.99(8)13.02Offshore(3)19.27 1217.20OilandGasReserves(MMBOE)(4)TotalProved5,664(3)5,866Probable2,793(2)2,836TotalProvedPlusProbable8,457(3)8,702(1)RefertotheOilSands,ConventionalorOffshoreReportableSegmentssectionofthisMD&Aforasummaryofp

53、roductionbyproducttypebysegment.IncludesCenovuss40percentequityinterestinHusky-CNOOCMaduraLtd.(“HCML”)jointventure,whichisaccountedforusingtheequitymethodintheConsolidatedFinancialStatements.(2)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(3)Containsanon-GAAPfinancialmeasure.Se

54、etheSpecifiedFinancialMeasuresAdvisory.OffshorePer-UnitOperatingExpensesreflectCenovuss40percentequityinterestintheHCMLjointventure.OperatingexpensesfortheOffshoresegment,excludingIndonesia,fortheyearendedDecember31,2024,was$423million(2023$384million).(4)IncludesvaluesattributabletoCenovuss30percen

55、tequityinterestintheDuvernayEnergyCorporation(“Duvernay”)jointventureandCenovuss40percentequityinterestintheHCMLjointventure.ProductionTotalupstreamproductionincreasedin2024comparedwith2023dueto:Successfulresultsfromourredevelopment,sustaining,growthandoptimizationprogramsinourOilSandssegment.Afully

56、earofproductionfromtheTerraNovaFPSOresumingproductioninNovember2023.IncreasedproductioninIndonesiafromtheMACfieldwhichhadfirstgasinthefourthquarterof2023.Theincreaseyear-over-yearisalsoduetolowerproductionin2023inChinafollowingthetemporaryunplannedoutagefromthedisconnectionoftheumbilicalbyathird-par

57、tyvesselinApril2023.Theproductionincreasesin2024werepartiallyoffsetbyturnaroundactivitiesintheOilSandsandConventionalsegments,andthesuspensionofproductionattheWhiteRosefieldinDecember2023fortheSeaRoseassetlifeextension(“ALE”)projectintheAtlanticregion.In our Conventional segment,production volumes w

58、ere consistent year-over-year.Production increased due to less welldowntimein2024comparedwith2023,partiallyoffsetbythedivestitureofnon-coreassets.Welldowntimein2024relatedtoplannedturnaroundactivity,while2023downtimewasprimarilyinresponsetowildfireactivity.Inthesecondhalfof2024,productionwasimpacted

59、bythedeferralofnewwelldevelopmentinresponsetolowernaturalgasbenchmarkprices.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis68|CENOVUS ENERGY 2024 ANNUAL REPORTPer-UnitOperatingExpensesFortheyearendedDecember31,2024,per-unitoperatingexpensesdecreasedintheOilSandssegment,comparedwith2023,mainlyd

60、uetolowerfuelcostsasaresultofsignificantdeclinesinnaturalgaspricingandincreasedsalesvolumes.Per-unitoperating expenses decreased in the Conventional segment,compared with 2023,mainly due to lower processing andgatheringcosts,electricitycostsandworkovercosts,partiallyoffsetbyincreasedrepairsandmainte

61、nancecosts.Per-unitoperatingexpensesincreasedintheOffshoresegment,comparedwith2023,primarilyduetohigherrepairsandmaintenanceandvesselmooringcostsrelatedtotheSeaRoseALEproject,andhigherrepairsandmaintenancecostsattheTerraNovafield.Overall,theCompanyhasmanagedinflationarypressuresthroughtheuseoflong-t

62、ermcontracts,workingwithvendorsandmanagingthetimingofpurchasesoflong-leaditems.OilandGasReservesBasedonourreservesreportspreparedbyindependentqualifiedreservesevaluators(“IQREs”),totalprovedreservesandtotalprovedplusprobablereservesasatDecember31,2024,wereapproximately5.7billionBOEand8.5billionBOE,r

63、espectively.Totalprovedreservesandtotalprovedplusprobablereserveseachdecreasedthreepercentcomparedwith2023.AdditionalinformationaboutourreservesisincludedintheOilandGasReservessectionofthisMD&A.SelectedOperatingandFinancialResultsDownstreamYearEndedDecember31,PercentChange20242023CrudeOilUnitThrough

64、putbySegment(Mbbls/d)CanadianRefining90.5(10)100.7U.S.Refining556.4 21459.7TotalCrudeOilUnitThroughput646.9 15560.4ProductionVolumesbyProduct(1)(Mbbls/d)Gasoline280.5 21231.2Distillates(2)219.9 22179.9SyntheticCrudeOil41.0(14)47.6Asphalt44.0 2535.2Ethanol4.8(4)5.0Other102.9 3100.3TotalProductionVolu

65、mes693.1 16599.2Per-UnitOperatingExpensesbySegment(3)(4)($/bbl)CanadianRefining22.56 6813.40U.S.Refining12.99(11)14.63Per-UnitOperatingExpensesExcludingTurnaroundCostsbySegment(3)($/bbl)CanadianRefining15.38 1613.29U.S.Refining11.55(18)14.01(1)RefertotheCanadianRefiningandU.S.RefiningReportableSegme

66、ntssectionofthisMD&Aforasummaryofproductionbyproductbysegment.(2)Includesdieselandjetfuel.(3)Specifiedfinancialmeasure.Per-unitmetricsarecalculatedbasedontotalprocessedinputs.SeetheSpecifiedFinancialMeasuresAdvisory.(4)Inclusiveofturnaroundcosts.IntheCanadianRefiningsegment,operatingexpensesrepresen

67、texpensesassociatedwiththeLloydminsterUpgrader,theLloydminsterRefineryandthecommercialfuelsbusiness.Wesafelycompletedtwosignificantturnarounds,aswellasaturnaroundattheBorgerRefinery,inourrefiningsegmentsin2024.InCanada,wecompletedaturnaroundattheUpgrader,whichwasthelargestinitshistoryinscopeandcost,

68、thatranfromearlyMaytoearlyJuly.IntheU.S.,wecompletedasignificantturnaroundattheLimaRefinerythatranfromearlySeptembertolateOctober.In 2024,total downstream throughput and refined product production increased compared with 2023.Throughput andproductionincreasedduetorealizingafullyearofproductionattheT

69、oledoandSuperiorrefineries,combinedwithimprovedreliabilityatouroperatedandnon-operatedrefineries.WeacquiredtheToledoRefineryonFebruary28,2023(the“ToledoAcquisition”)andtheSuperiorRefineryrampedupthroughout2023.Theincreaseswerepartiallyoffsetbyreducedthroughputandproductionduringtheturnaroundsdiscuss

70、edabove.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis7CENOVUS ENERGY 2024 ANNUAL REPORT|9In2024,per-unitoperatingexpenses,excludingturnaroundcosts,increasedintheCanadianRefiningsegmentcomparedwith2023,primarilyduetoreliabilityprojectscompletedduringtheturnaroundperiod.Per-unitoperatingexpens

71、es,excludingturnaroundcosts,intheU.S.Refiningsegmentdecreasedyear-over-yearprimarilyduetotheincreaseintotalprocessedinputs.SelectedConsolidatedFinancialResultsRevenuesRevenues increased four percent compared with 2023.Upstream revenue increased seven percent compared with 2023,primarilyduetothenarro

72、wingoftheWTI-WCSandcondensate-WCSdifferentialsfollowingthestart-upoftheTransMountainPipelineexpansionproject(“TMX”)andincreasedsalesvolumes.Downstreamrevenuesincreasedthreepercentcomparedwith2023,primarilyduetohighersalesvolumesintheU.S.Refiningsegment,partiallyoffsetbylowerrefinedproductpricing.Ope

73、ratingMarginOperating Margin is a non-GAAP financial measure and is used to provide a consistent measure of the cash generatingperformanceofourassetsforcomparabilityofourunderlyingfinancialperformancebetweenperiods.YearEndedDecember31,($millions)20242023GrossSalesExternalSales57,72655,474Intersegmen

74、tSales8,9708,23466,69663,708Royalties(3,449)(3,270)Revenues63,24760,438ExpensesPurchasedProduct33,92631,425TransportationandBlending11,33111,088OperatingExpenses7,1596,891Realized(Gain)LossonRiskManagementActivities2212OperatingMargin10,80911,022OperatingMarginbySegmentYearsEndedDecember31,2024and20

75、23($millions)9,7912911,039(80)(232)8,1695831,11867547720242023OilSandsConventionalOffshoreCanadianRefiningU.S.Refining(5,000)5,00010,00015,000CenovusEnergyInc.2024ManagementsDiscussionandAnalysis810|CENOVUS ENERGY 2024 ANNUAL REPORTOperatingMargindecreasedcomparedwith2023.Theincreaseinrevenues,asdis

76、cussedabove,wasmorethanoffsetby:LowermarketcrackspreadsimpactingourU.S.Refiningsegmentandhigherheavycrudeoilcostsaffectingbothofourrefiningsegments.HigheroperatingexpensesduetoturnaroundactivityattheUpgrader,LimaRefineryandChristinaLakeassets.Higher transportation expenses impacting our Oil Sands se

77、gment due to higher sales volumes exported todestinations outside of Alberta.This includes transportation expenses related to our use of TMX and increasedpipelinetransportationratesonshipmentstoU.S.destinations.CashFrom(Usedin)OperatingActivitiesandAdjustedFundsFlowAdjustedFundsFlowisanon-GAAPfinanc

78、ialmeasurecommonlyusedintheoilandgasindustrytoassistinmeasuringacompanysabilitytofinanceitscapitalprogramsandmeetitsfinancialobligations.YearEndedDecember31,($millions)20242023CashFrom(Usedin)OperatingActivities9,2357,388(Add)Deduct:SettlementofDecommissioningLiabilities(234)(222)NetChangeinNon-Cash

79、WorkingCapital1,305(1,193)AdjustedFundsFlow8,1648,803AdjustedFundsFlowwaslowerin2024,comparedwith2023,primarilyduetoanincreaseincurrenttaxexpense,thedecreaseinOperatingMarginandhigherlong-termincentivecostspaid,partiallyoffsetbyarealizedforeignexchangegainin2024,comparedwitharealizedforeignexchangel

80、ossin2023.Cashfromoperatingactivitiesincreasedin2024,comparedwith2023,primarilyduetoaworkingcapitalrelease,whichmorethanoffsetthedecreaseinAdjustedFundsFlow.Thenetchangeinnon-cashworkingcapitalwasprimarilyduetoasourceofcashin2024asaccountsreceivablesdecreased,andaccountspayableandtaxespayableincreas

81、ed,comparedwithauseofcashin2023mainlycausedbyanincometaxliabilityfrom2022thatwaspaidinthefirstquarterof2023.NetEarnings(Loss)Netearningsin2024was$3.1billion(2023$4.1billion).Thedecreasewasprimarilyduetoforeignexchangelosses,higherdepreciation,depletion,amortizationandexplorationexpense,lowerOperatin

82、gMargin,andhighergeneralandadministrativeexpense.Thedecreasewaspartiallyoffsetbygainsonthedivestitureofnon-coreassetsin2024.NetDebtAsat($millions)December31,2024December31,2023Short-TermBorrowings173179CurrentPortionofLong-TermDebt192Long-TermPortionofLong-TermDebt7,3427,108TotalDebt7,7077,287Cashan

83、dCashEquivalents(3,093)(2,227)NetDebt4,6145,060Long-termdebtincreasedby$426millionfromDecember31,2023,primarilyduetoanunrealizedlossof$442millionresultingfromtheweakeningoftheCanadiandollarrelativetotheU.S.dollar,impactingthetranslationofourU.S.denominateddebt.NetDebtdecreasedby$446millionfromDecemb

84、er31,2023,mainlyduetocashfromoperatingactivitiesof$9.2billion,partiallyoffsetbycapitalinvestmentof$5.0billion,cashreturnstocommonandpreferredshareholdersof$3.2billionandtheincreaseinlong-termdebtdiscussedabove.Forfurtherdetails,seetheLiquidityandCapitalResourcessectionofthisMD&A.CenovusEnergyInc.202

85、4ManagementsDiscussionandAnalysis9CENOVUS ENERGY 2024 ANNUAL REPORT|11CapitalInvestment(1)YearEndedDecember31,($millions)20242023UpstreamOilSands2,7142,382Conventional421452Offshore1,145642TotalUpstream4,2803,476DownstreamCanadianRefining208145U.S.Refining488602TotalDownstream696747CorporateandElimi

86、nations3975TotalCapitalInvestment5,0154,298(1)Includes expenditures on property,plant and equipment(“PP&E”),exploration and evaluation(“E&E”)assets and capitalized interest.Excludes capitalexpendituresrelatedtotheCompanysjointventures.Capitalinvestmentin2024wasmainlyrelatedto:Sustaining,redevelopmen

87、tandoptimizationprogramsintheOilSandssegment,includingthedrillingofstratigraphictestwellsaspartofourintegratedwinterprogram.TheprogressionoftheWestWhiteRoseprojectandtheexecutionoftheSeaRoseALEproject.SustainingactivitiesatouroperatedCanadianandU.S.refiningassets,andrefiningreliabilityprojectsatourn

88、on-operatedrefineries.GrowthprojectsinourOilSandssegment,includingthemechanicalcompletionoftheNarrowsLakepipelinetoChristinaLake,theoptimizationprojectatFosterCreek,theSunrisegrowthprogramandtheprogressionoftheplanneddrillingprogramatourLloydminsterconventionalheavyoilassets.Drilling,completion,tie-

89、inandinfrastructureprojectsintheConventionalsegment.DrillingActivityNetStratigraphicTestWellsandObservationWellsNetProductionWells(1)2024202320242023FosterCreek85872244ChristinaLake61532327Sunrise40381424LloydminsterThermal5371229LloydminsterConventionalHeavyOil1934934Other3258255130138(1)Steam-assi

90、stedgravitydrainage(“SAGD”)wellpairsintheOilSandssegmentarecountedasasingleproducingwell.Stratigraphictestwellsweredrilledtohelpidentifyfuturewellpadlocationsandtofurtherprogresstheevaluationofotherassets.Observationwellsweredrilledtogatherinformationandmonitorreservoirconditions.20242023(netwells)D

91、rilled(1)CompletedTied-inDrilledCompletedTied-inConventional363131383741(1)IncludesvaluesattributabletoCenovuss30percentequityinterestintheDuvernayjointventure.IntheOffshoresegment,wedrilledandevaluatedoneexplorationwellinChina(2023drilledandcompletedone(0.4net)developmentwellattheMACfieldinIndonesi

92、a).CenovusEnergyInc.2024ManagementsDiscussionandAnalysis1012|CENOVUS ENERGY 2024 ANNUAL REPORTCOMMODITYPRICESUNDERLYINGOURFINANCIALRESULTSKeyperformancedriversforourfinancialresultsincludecommodityprices,qualityandlocationpricedifferentials,refinedproductpricesandrefiningcrackspreads,aswellastheU.S.

93、/CanadiandollarandChineseYuan(“RMB”)/Canadiandollarexchange rates.The following table shows selected market benchmark prices and average exchange rates to assist inunderstandingourfinancialresults.SelectedBenchmarkPricesandExchangeRates(1)(AverageUS$/bbl,unlessotherwiseindicated)2024PercentChange202

94、3Q42024Q32024Q42023DatedBrent80.76(2)82.6274.6980.1884.05WTI75.72(2)77.6270.2775.0978.32DifferentialDatedBrent-WTI5.04 15.004.425.095.73WCSatHardisty60.97 358.9757.7161.5456.43DifferentialWTI-WCSatHardisty14.75(21)18.6512.5613.5521.89WCSatHardisty(C$/bbl)83.52 579.5980.7483.9576.95WCSatNederland69.6

95、9 69.7465.6968.5171.59DifferentialWTI-WCSatNederland6.03(23)7.884.586.586.73Condensate(C5atEdmonton)72.94(5)76.6170.6671.1976.24DifferentialCondensate-WTIPremium/(Discount)(2.78)175(1.01)0.39(3.90)(2.08)DifferentialCondensate-WCSatHardistyPremium/(Discount)11.97(32)17.6412.959.6519.81Condensate(C$/b

96、bl)99.92(3)103.4398.8497.10103.90SyntheticatEdmonton75.07(6)79.6171.1176.4178.64DifferentialSynthetic-WTIPremium/(Discount)(0.65)(133)1.990.841.320.32SyntheticatEdmonton(C$/bbl)102.83(4)107.4799.45104.22107.21RefinedProductPricesChicagoRegularUnleadedGasoline(“RUL”)89.95(8)97.8678.9592.2983.72Chicag

97、oUltra-lowSulphurDiesel(“ULSD”)97.47(11)109.7089.2896.55107.24RefiningBenchmarksChicago3-2-1CrackSpread(2)16.74(31)24.1912.1218.6213.24Group33-2-1CrackSpread(2)16.81(43)29.6612.6618.9518.55RenewableIdentificationNumbers(“RINs”)3.74(47)7.044.023.894.77UpgradingDifferential(3)(C$/bbl)19.21(30)27.5518.

98、6420.2629.97NaturalGasPricesAECO(4)(C$/Mcf)1.46(45)2.641.480.692.30NYMEX(5)(US$/Mcf)2.27(17)2.742.792.162.88ForeignExchangeRatesUS$perC$1Average0.730(1)0.7410.7150.7330.734US$perC$1EndofPeriod0.695(8)0.7560.6950.7410.756RMBperC$1Average5.255 5.2475.1425.2555.304(1)These benchmark prices are not our

99、Realized Sales Prices and represent approximate values.For our average Realized Sales Prices and realized riskmanagementresults,refertotheNetbacktablesintheUpstreamReportableSegmentssectionofthisMD&A.(2)Theaverage3-2-1crackspreadisanindicatoroftherefiningmarginandisvaluedonalastin,firstoutaccounting

100、basis.(3)TheupgradingdifferentialisthedifferencebetweensyntheticcrudeoilatEdmontonandLloydminsterBlendcrudeoilatHardisty.Theupgradingdifferentialdoesnotpreciselymirrortheconfigurationandtheproductoutputofourrefineries;however,itisusedasageneralmarketindicator.(4)AlbertaEnergyCompany(AECO)5Anaturalga

101、sdailyindex.(5)NewYorkMercantileExchange(“NYMEX”)naturalgasmonthlyindex.CrudeOilandCondensateBenchmarksIn2024,crudeoilbenchmarkprices,BrentandWTIdecreasedcomparedwith2023.Priceswerehigherinthefirsthalfof2024,comparedwiththefirsthalfof2023,asgeopoliticaleventsrelatedtoRussiaandUkraine,IsraelandGaza,I

102、ran,theRedSea,VenezuelaandGuyanaaddedtovolatilityandriskpremiums,buthadalimitedimpactonphysicalsupplyanddemandinglobaloil markets.Weaker than expected global demand and potential unwinding of OPEC+voluntary production cuts furtherweighedonpricesinthesecondhalfof2024,whichwaspartiallyoffsetbylowgloba

103、linventoriesofcrude.Globalsupplyanddemandwererelativelybalancedthrough2024asOPEC+policycontinuedtosupportmarketsthroughtheyearasplanstounwindvoluntarycutswereextendedthroughthefirstquarterof2025.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis11CENOVUS ENERGY 2024 ANNUAL REPORT|13WTIisanimporta

104、ntbenchmarkforCanadiancrudeoilsinceitreflectsinlandNorthAmericancrudeoilprices,andtheCanadiandollarequivalentisthebasisfordeterminingroyaltyratesforanumberofourcrudeoilproperties.ThepricereceivedforourAtlanticcrudeoilandAsiaPacificNGLsisprimarilydrivenbythepriceofBrent.TheBrent-WTIdifferentialin2024

105、wasrelativelyconsistentcomparedwith2023.WCSisablendedheavyoilwhichconsistsofbothconventionalheavyoilandunconventionaldilutedbitumen.TheWCSatHardistydifferentialtoWTIisafunctionofthequalitydifferentialoflightandheavycrude,andthecostoftransport.TheWTI-WCSdifferentialatHardistynarrowedin2024,comparedwi

106、th2023,duetothestart-upofTMXincreasingmarketaccessforWCScrude,theimpactofSaudiArabiasvoluntaryproductioncuts,whichareweightedtowardsmediumandheavycrude,andstrongerglobaldemandforheavycrude.WCSatNederlandisaheavyoilbenchmarkforsalesofourproductattheU.S.GulfCoast(“USGC”).TheWTI-WCSatNederlanddifferent

107、ialisrepresentativeoftheheavyoilqualitydifferentialandisinfluencedbyglobalheavyoilrefiningcapacityandglobalheavy oil supply.In 2024,the WTI-WCS at Nederland differential narrowed compared with 2023,due to the continuedvoluntaryproductioncutsfromOPEC+members,includingSaudiArabia.InCanada,weupgradehea

108、vycrudeoilandbitumenintoasweetsyntheticcrudeoil,theHuskySyntheticBlend(“HSB”),attheUpgrader.ThepricerealizedforHSBisprimarilydrivenbythepriceofWTIandbythesupplyanddemandofsweetsyntheticcrudeoilfromWesternCanada,whichinfluencestheWTI-Syntheticdifferential.In2024,syntheticcrudeoilatEdmontonwaspricedat

109、adiscounttoWTI,comparedwithapremiumtoWTIin2023.Theweaknessinpricingrelativeto2023wasafunctionofdeepdiscountsinthefirstquarterof2024,duetohighsyntheticcrudeoilproductioninAlberta,supplyoflightcrudebeingabovepipelinecapacityonlightcrudepipelinesandlimitedlocalstoragecapacity.CrudeOilBenchmarkPrices(1)

110、(averageUS$/bbl)WTIWCSatHardistyWCSatNederlandDatedBrentSyntheticatEdmontonQ42022Q12023Q22023Q32023Q42023Q12024Q22024Q32024Q42024Q12025FQ22025FQ32025FQ42025F406080100(1)ForwardpricingasatJanuary31,2025.Blendingcondensatewithbitumenenablesourproductiontobetransportedthroughpipelines.Ourblendingratios

111、,calculatedas diluent volumes as a percentage of total blended volumes,range from approximately 20 percent to 35 percent.TheCondensate-WCSdifferentialisanimportantbenchmark,asahigherpremiumgenerallyresultsinadecreaseinoperatingmarginwhensellingabarrelofblendedcrudeoil.WhenthesupplyofcondensateinAlbe

112、rtadoesnotmeetthedemand,EdmontoncondensatepricesmaybedrivenbyUSGCcondensatepricesplusthecosttotransportthecondensatetoEdmonton.Ourblendingcostsarealsoimpactedbythetimingofpurchasesanddeliveriesofcondensateintoinventorytobeavailableforuseinblending,aswellastimingofblendedproductsales.In2024,theaverag

113、eEdmontoncondensatebenchmarktradedatagreaterdiscounttoWTIcomparedwith2023.Weaknesswasinfluencedbylowlightcrudeoilpricesinthefirstquarterof2024inAlberta,asanoversupplyoflightcrudeexceededpipelinetakeawaycapacity.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis1214|CENOVUS ENERGY 2024 ANNUAL REPO

114、RTRefiningBenchmarksRULandULSDbenchmarkpricesarerepresentativeofinlandrefinedproductpricesandareusedtoderivetheChicago3-2-1marketcrackspread.The3-2-1marketcrackspreadisanindicatoroftherefiningmargingeneratedbyconvertingthreebarrelsofcrudeoilintotwobarrelsofregularunleadedgasolineandonebarrelofultra-

115、lowsulphurdiesel,usingcurrent-monthWTI-basedcrudeoilfeedstockpricesandvaluedonalastin,firstoutbasis.In2024,refinedproductpricesdeclinedcomparedwith2023,duetohighglobalandregionalsupplyofrefinedproductsasaresultofincrementalglobalrefiningcapacityadditionsandU.S.refineriesoperatingathighutilizationrat

116、esformostof2024.Refinery utilization in PADD 2 remained high throughout the fourth quarter of 2024,despite lower seasonal demand forgasoline,whichresultedintheChicago3-2-1crackspreadweakeningbyUS$1.00/bblrelativetothefourthquarterof2023.AveragecostofRINswerealsolowerin2024comparedwith2023,duetoadecl

117、ineinbiofuelfeedstockcostsandincreasedrenewabledieselproduction.NorthAmericanrefiningcrackspreadsareexpressedonaWTIbasis,whilerefinedproductsaregenerallysetbyglobalprices.ThestrengthofrefiningmarketcrackspreadsintheU.S.MidwestandMidcontinentgenerallyreflectsthedifferentialbetweenBrentandWTIbenchmark

118、prices.Ourrefiningmarginsareaffectedbyvariousotherfactorssuchasthequalityandpurchaselocationofcrudeoilfeedstock,refineryconfigurationandproductoutput,andthetimelagbetweenthepurchaseoffeedstockandtheproductsale,asthefeedstockisvaluedonafirstin,firstout(“FIFO”)accountingbasis.Themarketcrackspreadsdono

119、tpreciselymirrortheconfigurationandproductoutputofourrefineries,orthelocationwesellproduct;however,theyareusedasageneralmarketindicator.RefinedProductBenchmarks(1)(averageUS$/bbl)(averageUS$/bbl-RULandULSD)Chicago3-2-1CrackSpreadGroup33-2-1CrackSpreadRULULSDQ42022Q12023Q22023Q32023Q42023Q12024Q22024

120、Q32024Q42024Q12025FQ22025FQ32025FQ42025F0102030405060700255075100125150175(1)ForwardpricingasatJanuary31,2025.NaturalGasBenchmarksIn2024,averageNYMEXandAECOnaturalgaspricesdecreasedcomparedwith2023,duetohighproduction,highinventorylevelsandmildweatherintheU.S.andWesternCanada.AECOpricesweakenedfurth

121、errelativetoNYMEXnaturalgasduetolimitedWesternCanadiantakeawaycapacity.ThepricereceivedforourAsiaPacificnaturalgasproductionislargelybasedonlong-termcontracts.ForeignExchangeBenchmarksOurrevenuesaresubjecttoforeignexchangeexposureasthesalespricesofourcrudeoil,NGLs,naturalgasandrefinedproducts are de

122、termined by reference to U.S.dollar benchmark prices.An increase in the value of the Canadian dollarcomparedwiththeU.S.dollarhasanegativeimpactonourreportedrevenue.InadditiontoourrevenuesbeingdenominatedinU.S.dollars,asignificantportionofourlong-termdebtisalsoU.S.dollardenominated.AstheCanadiandolla

123、rweakens,ourU.S.dollar debt gives rise to unrealized foreign exchange losses when translated to Canadian dollars.Changes in foreignexchangeratesalsoimpactthetranslationofourU.S.andAsiaPacificoperations.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis13CENOVUS ENERGY 2024 ANNUAL REPORT|15In2024,

124、onaverage,theCanadiandollarweakenedrelativetotheU.S.dollarcomparedwith2023,positivelyimpactingourreported revenues.The Canadian dollar weakened relative to the U.S.dollar as at December 31,2024,compared withDecember31,2023,resultinginunrealizedforeignexchangelossesonthetranslationofourU.S.dollardebt

125、.Aportionofourlong-termsalescontractsintheAsiaPacificregionarepricedinRMB.AnincreaseinthevalueoftheCanadiandollarrelativetotheRMBwilldecreasetherevenuesreceivedinCanadiandollarsfromthesaleofnaturalgascommoditiesintheregion.In2024,onaverage,theCanadiandollarwasrelativelyconsistentwiththeRMBcomparedwi

126、th2023.InterestRateBenchmarksOur interest income,short-term borrowing costs,reported decommissioning liabilities and fair value measurements areimpactedbyfluctuationsininterestrates.Achangeininterestratescouldchangeournetfinancecosts,affecthowcertainliabilitiesaremeasured,andimpactourcashflowandfina

127、ncialresults.AsatDecember31,2024,theBankofCanadasPolicyInterestRatewas3.25percent,adecreasefrom5.00percentonDecember31,2023.OnJanuary29,2025,theBankofCanadareducedtheovernightrateby25basispointsto3.00percentduetotheeasingofinflationconcernsandthethreatoftradetariffs.OUTLOOKCommodityPriceOutlookAltho

128、ugh discussions continue regarding a potential economic arrangement between the U.S.and Canada,there remainssignificant uncertainty over whether tariffs,surtaxes,or other restrictive trade measures or countermeasures will beimplemented.Potentialmeasurescouldinclude,amongothers,increasedtariffsonCana

129、dianenergyexports,restrictionsoncross-bordersupplychains,oradditionalregulatorybarriersthatcouldhaveasignificantimpactonthemarketforcrudeoil,NGLs,naturalgasandrefinedpetroleumproductsinCanadaandinternationally,andcouldresultin,amongotherthings,ahighdegreeofbothcostandpricevolatility,arelativeweakeni

130、ngoftheCanadiandollarandwideningdifferentials.Wecontinuetomonitorthesedevelopmentsclosely;however,thesemattershaveintroduceduncertaintyandvolatilityinthemarket.Thescope,impactanddurationofanymeasuresimplementedremainuncertainatthistime.Globalcrudeoilpriceshavetrendedlowerin2024,comparedwith2023,asOP

131、EC+announceditsintentiontoendproductioncutsthathavesupportedprices.OPEC+planstograduallyunwindvoluntarycutsover18monthsstartingApril2025.Non-OPEC+supplygrowth,ledbyU.S.shale,hasbeenrobustandisexpectedtocontinuetogrowin2025,thoughslowingU.S.drillingactivitysince2023hassoftenedtheexpectationsforU.S.su

132、pplygrowthmodestly.Demandgrowthhascontinued,buthasbeenweakerthanin2023,duetolowerthanexpectedChinesedemandgrowth,whichhasalsoweighedonprices.Currentgeopoliticalrisksarecausingvolatilityinglobaloilprices,withanyescalationcausingpricestoriseandanyde-escalationcausingpricestosettle.Withplannedproductio

133、ngrowthexpectedfromOPEC+duetotheunwindingofproductioncuts,andhighMiddleEastspareproductioncapacity,geopoliticaltensionsarenotimpactingglobaloilpricesasmuchastheywouldhaveinanunder-suppliedormorebalancedglobaloilmarket.Crudeoilpricetrajectoryremainsuncertainandvolatileamidamarketwithunpredictablekeyd

134、riversandgovernmentpolicyplayingalargeroleinsupplyanddemanddynamics.OPEC+policy continues to remain crucial to global oil supply and demand balances,and prices.In the U.S.,Trumpadministrationpoliciesaroundtariffs,traderelations,globalconflictsanddomesticsupplywillbekeyconsiderationsforenergyprices.G

135、lobalpoliciesregardingRussia,IranandVenezuelaareamongkeyfactorsthatwilldriveenergysupplyandshiftglobaltradepatterns.Overall,weexpectthegeneraloutlookforcrudeoilandrefinedproductpriceswillbevolatileandimpactedbyOPEC+policy,thedurationandseverityoftheongoingRussianinvasionofUkraine,theextenttowhichRus

136、sianexportsarereducedbysanctionsorproductioncuts,thepaceofnon-OPEC+supplygrowth,thepotentialforresumedcrisisinIsraelandGazaiftheceasefirebreaksdownincludinganyspreadtoawiderconflict,developmentsrelatingtoconflictsinvolvingIranandattacksonvesselsintheRedSea,andtensionsbetweenVenezuelaandGuyana.Inaddi

137、tion,weakeningglobaleconomicactivity,inflationandinterestrateuncertainty,andthepotentialforarecessionremainarisktothepaceofdemandgrowth.Refinedproductpriceshavedeclinedin2024comparedwith2023,asaresultofincrementalglobalcapacityadditions,reducedRINprices,andU.S.refineriesoperatingatveryhighutilizatio

138、nrates.Forwardcurvesareshowingsignsofrefinedproductpricesstrengtheningin2025.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis1416|CENOVUS ENERGY 2024 ANNUAL REPORTInadditiontotheabove,ourcommoditypricingoutlookforthenext12monthsisinfluencedbythefollowing:WeexpecttheWTI-WCSatHardistydifferential

139、willremainlargelytiedtoglobalsupplyfactorsandheavycrudeoilprocessingcapacity,aslongassupplystayswithinCanadiancrudeoilexportcapacity.Asexpected,thestart-upofTMXin2024ishavinganarrowingimpactonWTI-WCSdifferentials.Weexpectrefinedproductpriceswillremainvolatile.EconomiceffectsoftheongoingRussianinvasi

140、onofUkraineandcentralbankpoliciescontinuetoimpactdemand.Refinedproductpricesandmarketcrackspreadsarelikelytocontinuetofluctuate,adjustingforseasonaltrendsandrefineryutilizationinNorthAmericaandglobally.NYMEXandAECOnaturalgaspricesareexpectedtoremainunderpressureinthenear-termduetostrongsupplyandampl

141、enaturalgasinstorage,althoughtheprospectofnewLNGfacilitiesintheU.S.comingintoserviceorrampingupinthenext12monthscouldincreasedemandandsupportnaturalgaspricesonNYMEX.Weatherwillcontinuetobeakeydriverofdemandandimpactprices.WeexpecttheCanadiandollartocontinuetobeimpactedbythepaceatwhichtheU.S.FederalR

142、eserveBoardandtheBankofCanadaraiseorlowerbenchmarklendingratesrelativetoeachother,TrumpadministrationpoliciestowardCanada-U.S.trade,crudeoilpricesandemergingmacro-economicfactors.MostofourupstreamcrudeoilanddownstreamrefinedproductproductionisexposedtomovementsintheWTIcrudeoilprice.Ourintegratedupst

143、reamanddownstreamoperationshelpustomitigatetheimpactofcommoditypricevolatility.Crudeoilproductioninourupstreamassetsisblendedwithcondensateandbutane,andisusedascrudeoilfeedstockatourdownstreamrefiningoperations.CondensateextractedfromourblendedcrudeoilissoldbacktoourOilSandsoperations.Ourrefiningcap

144、acityisfocusedintheU.S.Midwest,alongwithsmallerexposuresintheUSGCandAlberta,exposingCenovustomarketcrackspreadsinthesemarkets.Wewillcontinuetomonitormarketfundamentalsandoptimizerunratesatourrefineriesaccordingly.Ourexposuretocrudedifferentialsincludeslight-heavyandlight-mediumpricedifferentials.The

145、light-mediumpricedifferentialexposureisfocusedonlight-mediumcrudesintheU.S.Midwestmarketregionwherewehavethemajorityofourrefiningcapacity,andtoalesserdegree,intheUSGCandAlberta.Ourexposuretolight-heavycrudeoilpricedifferentialsiscomposedofagloballight-heavycomponent,aregionalcomponentinmarketswetran

146、sportbarrelsto,aswellastheAlbertadifferentials,whichcouldbesubjecttotransportationconstraints.Whileweexpecttoseevolatilityincrudeoilprices,wehavetheabilitytopartiallymitigatetheimpactofcrudeoilandrefinedproductdifferentialsthroughthefollowing:Transportationcommitmentsandarrangementsusingourexistingf

147、irmservicecommitmentsfortakeawaycapacityand supporting transportation projects that move crude oil from our production areas to consuming markets,includingtidewatermarkets.IntegrationheavyoilrefiningcapacityallowsustocapturevaluefromboththeWTI-WCSdifferentialforCanadiancrudeoilandspreadsonrefinedpro

148、ducts.Monitoringmarketfundamentalsandoptimizingrunratesatourrefineriesaccordingly.Traditionalcrudeoilstoragetanksinvariousgeographiclocations.KeyPrioritiesfor2025Our2025prioritiesarefocusedontop-tiersafetyperformance,improvedreliabilityinourdownstreambusiness,maintainingandgrowingourcompetitiveadvan

149、tagesinourOilSandsbusinessandexecutiononourgrowthprojects.Wewillcontinuetomaintainreturnstoshareholdersandfocusoncostandsustainabilityimprovements.Top-tierSafetyPerformanceSafeandreliableoperationsareournumberonepriority.Westrivetoensuresafeandreliableoperationsacrossourportfolio,andaimtobebest-in-c

150、lassoperatorsforeachofourmajorassetsandbusinesses.DownstreamCompetitivenessAcompetitive,reliabledownstreambusinessisessentialtoourintegratedbusiness.Itallowsustobeagileinourresponsetofluctuatingdemandforrefinedproductsandservesasanaturalpartialhedgeintimesofwideninglocationandheavyoildifferentials.W

151、ewillcontinuetotargetimprovedreliabilityofourdownstreamassets,leveragingourupstreamexpertisetomaximizethelong-termprofitabilityofourassets.OilSandsBusinessOurOilSandsbusinessisthebackboneofourcompany.Maintainingandgrowingourcompetitiveadvantageswhileoperatingsafelyandreliablyiscriticaltoourcompany.C

152、enovusEnergyInc.2024ManagementsDiscussionandAnalysis15CENOVUS ENERGY 2024 ANNUAL REPORT|17ProjectExecutionInvestinginfuturegrowthisafocusforus,withseveralkeyprojectsunderway,includingtheWestWhiteRoseproject,theoptimizationandsulphurrecoveryprojectsatFosterCreek,theSunrisegrowthprogramandtheLloydmins

153、terconventionalheavyoilgrowthproject.Weplantocontinuetoexecutethesemulti-yearprojectsontimeandonbudget.Wemadethedecisiontorecalibrateworkontheenterprise-wideITsystemsupgradestoamorefitforpurposeoutcome.Certaincomponentsoftheproject,includingthereplacementofCenovussenterpriseresourceplanningsystems,w

154、illbeputonholdasaresultofcontinuingtofocusoncontrollingcorporatecosts.WorkwillcontinueoncybersecurityresilienceandstandardizationofdatagovernancetoenhanceefficiencyandeffectivenessoftheCompanyssystems.CostLeadershipWeaimtomaximizeshareholdervaluethroughcontinuedfocusonlowcoststructuresandmarginoptim

155、izationacrossourbusiness.Wearefocusedonreducingoperating,capitalandgeneralandadministrativecosts,realizingthefullvalueofourintegratedstrategywhilemakingdecisionsthatsupportlong-termvalueforCenovus.ReturnstoShareholdersMaintainingastrongbalancesheetwiththeresiliencetowithstandpricevolatilityandcapita

156、lizeonopportunitiesthroughoutthe commodity price cycle is a key element of Cenovuss capital allocation framework.We plan to steward Net Debt to$4.0billionandreturn100percentofExcessFreeFundsFlowtoshareholdersovertime.Forfurtherdetails,seetheLiquidityandCapitalResourcessectionofthisMD&A.Sustainabilit

157、ySustainabilityiscentraltoCenovussculture.Wehaveestablishedambitioustargetsinourfiveenvironmental,socialandgovernance(“ESG”)focusareas,andwecontinuetoadvanceworktosupportprogressagainstthesetargets.WecontinuetosupportourcommitmenttothePathwaysAlliancefoundationalproject,includingeffortstoreachagreem

158、entswiththefederalandprovincialgovernmentsthatprovideasufficientleveloffiscalsupporttoprogresslarge-scalecarboncaptureprojects,whilemaintainingglobalcompetitiveness.Itiscriticalthatthefederalandprovincialgovernmentsprovidesupportatalevelconsistentwithwhatsimilarlarge-scalecarboncaptureprojectsarerec

159、eivinggloballytoenableCanadatoachieveitsgreenhousegas(“GHG”)emissionsgoals.AdditionalinformationonCenovussperformanceinsafety,Indigenousreconciliation,andinclusionanddiversityisavailableinCenovuss2023CorporateSocialR.2025CorporateGuidanceOurcorporateguidancedatedDecember11,2024,.Our2025corporateguid

160、ancefortotalcapitalinvestmentisbetween$4.6billionand$5.0billion.Thisincludes$3.2billiondirected towards sustaining capital to maintain base production and support continued safe and reliable operations,andbetween$1.4billionand$1.8billioninoptimizationandgrowthcapital.Optimizationandgrowthcapitalwill

161、bedirectedmainlytoward:InstallationandcommissioningoftheWestWhiteRoseproject.ProgressingtheoptimizationandtheenhancedsulphurrecoveryprojectsatFosterCreek.DrillingnewwellpadsatSunriseanddevelopmentdrillingatourconventionalheavyoilbusinessintheLloydminsterarea.Initiativesinourdownstreambusinesstoimpro

162、vesafety,maintenanceandreliability.Thefollowingtableshowsourcorporateguidancefor2025:CapitalInvestment($millions)Production(MBOE/d)CrudeOilUnitThroughput(Mbbls/d)UpstreamOilSands2,700-2,800615-635Conventional350-400125-135Offshore900-1,00065-75UpstreamTotal3,950-4,200805-845Downstream650-750650-685C

163、orporateandEliminationsUpto50CenovusEnergyInc.2024ManagementsDiscussionandAnalysis1618|CENOVUS ENERGY 2024 ANNUAL REPORTREPORTABLESEGMENTSTheCompanyoperatesthroughthefollowingreportablesegments:UpstreamSegmentsOilSands,includesthedevelopmentandproductionofbitumenandheavyoilinnorthernAlbertaandSaskat

164、chewan.Cenovuss oil sands assets include Foster Creek,Christina Lake,Sunrise,Lloydminster thermal and Lloydminsterconventionalheavyoilassets.Cenovusjointlyownsandoperatespipelinegatheringsystemsandterminalsthroughtheequity-accountedinvestmentinHuskyMidstreamLimitedPartnership(“HMLP”).Thesaleandtrans

165、portationofCenovussproductionandthird-partycommoditytradingvolumesaremanagedandmarketedthroughaccesstocapacityonthird-partypipelinesandstoragefacilitiesinbothCanadaandtheU.S.tooptimizeproductmix,deliverypoints,transportationcommitmentsandcustomerdiversification.Conventional,includesassetsrichinNGLsa

166、ndnaturalgasinAlbertaandBritishColumbiaintheEdson,ClearwaterandRainbowLakeoperatingareas,inadditiontotheNorthernCorridor,whichincludesElmworthandWapiti.Thesegment also includes interests in numerous natural gas processing facilities.Cenovuss NGLs and natural gasproductionismarketedandtransported,wit

167、hadditionalthird-partycommoditytradingvolumes,throughaccesstocapacityonthird-partypipelines,exportterminalsandstoragefacilities.Theseprovideflexibilityformarketaccesstooptimizeproductmix,deliverypoints,transportationcommitmentsandcustomerdiversification.Offshore,includesoffshoreoperations,exploratio

168、nanddevelopmentactivitiesintheeastcoastofCanadaandtheAsia Pacific region,representing China and the equity-accounted investment in HCML,which is engaged in theexplorationforandproductionofNGLsandnaturalgasinoffshoreIndonesia.DownstreamSegmentsCanadianRefining,includestheownedandoperatedLloydminsteru

169、pgradingandasphaltrefiningcomplex,whichconvertsheavyoilandbitumenintosyntheticcrudeoil,diesel,asphaltandotherancillaryproducts.CenovusalsoownsandoperatestheBruderheimcrude-by-railterminalandtwoethanolplants.TheCompanyscommercialfuelsbusiness across Canada is included in this segment.Cenovus markets

170、its production and third-party commoditytradingvolumesinanefforttouseitsintegratednetworkofassetstomaximizevalue.U.S.Refining,includestherefiningofcrudeoiltoproducegasoline,diesel,jetfuel,asphaltandotherproductsatthewholly-ownedLima,SuperiorandToledorefineries.TheU.S.Refiningsegmentalsoincludesthejo

171、intly-ownedWoodRiverandBorgerrefineries,heldthroughWRBRefiningLP(“WRB”),ajointly-ownedentitywithoperatorPhillips66.Cenovusmarketssomeofitsownandthird-partyrefinedproductsincludinggasoline,diesel,jetfuelandasphalt.CorporateandEliminationsCorporateandEliminations,includesCenovus-widecostsforgeneraland

172、administrative,financingactivities,gainsand losses on risk management for corporate related derivative instruments and foreign exchange.Eliminationsincludeadjustmentsforfeedstockandinternalusageofcrudeoil,naturalgas,condensate,otherNGLsandrefinedproductsbetweensegments;transloadingservicesprovidedto

173、theOilSandssegmentbytheCompanyscrude-by-railterminal;thesaleofcondensateextractedfromblendedcrudeoilproductionintheCanadianRefiningsegmentandsoldtotheOilSandssegment;andunrealizedprofitsininventory.Eliminationsarerecordedbasedonmarketprices.UPSTREAMOilSandsIn2024,we:Deliveredsafeandreliableoperation

174、s,includingthesafeexecutionofaturnaroundatChristinaLakewhichwascompletedaheadofschedule.Produced610.7thousandBOEperday,ourhighest-everannualproduction(2023595.4thousandBOEperday).Deliveredsuccessfulresultsfromourredevelopment,sustaining,growthandoptimizationprograms.GeneratedOperatingMarginof$9.8bil

175、lion,anincreaseof$1.6billioncomparedwith2023,duetohigheraverageRealizedSalesPrices,highersalesvolumesandlowerfueloperatingcosts.EarnedaNetbackof$44.88perBOE(2023$38.10perBOE).Investedcapitalof$2.7billionforsustainingactivitiesandgrowthprojects.WemechanicallycompletedtheNarrowsLakepipelinetoChristina

176、LakeandbroughtthreewellpadsonlineaspartoftheSunrisegrowthprogram.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis17CENOVUS ENERGY 2024 ANNUAL REPORT|19FinancialResults($millions)20242023GrossSalesExternalSales21,85720,608IntersegmentSales6,5905,58428,44726,192Royalties(3,274)(3,059)Revenues25,1

177、7323,133ExpensesPurchasedProduct1,8511,457TransportationandBlending11,00010,774Operating2,5112,716Realized(Gain)LossonRiskManagement2017OperatingMargin9,7918,169Unrealized(Gain)LossonRiskManagement(16)15Depreciation,DepletionandAmortization3,1172,993ExplorationExpense219(Income)LossfromEquity-Accoun

178、tedAffiliates(14)6SegmentIncome(Loss)6,7025,136OperatingMarginVarianceYearEndedDecember31,2024($millions)8,1691,5712816(212)(217)201(7)9,791YearEndedDecember31,2023Price(1)VolumeCondensateRevenue(1)RoyaltiesTransportationandBlending(1)OperatingExpensesOther(2)YearEndedDecember31,20245,00010,00015,00

179、0(1)Reportedrevenuesincludethevalueofcondensatesoldasheavyoilblend.Condensatecostsarerecordedintransportationandblendingexpenses.Thecrudeoilpriceexcludestheimpactofcondensatepurchases.Changestopriceincludetheimpactofrealizedriskmanagementgainsandlosses.(2)Includesthird-partysourcedvolumes,constructi

180、onandotheractivitiesnotattributabletotheproductionofcrudeoilornaturalgas.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis1820|CENOVUS ENERGY 2024 ANNUAL REPORTOperatingResults20242023TotalSalesVolumes(1)(MBOE/d)599.5589.5RealizedSalesPrice(2)($/BOE)80.2073.02CrudeOilProductionbyAsset(Mbbls/d)Fo

181、sterCreek196.0186.3ChristinaLake234.2237.4Sunrise49.648.9LloydminsterThermal111.5104.1LloydminsterConventionalHeavyOil17.616.7TotalCrudeOilProduction(3)(Mbbls/d)608.9593.4NaturalGas(4)(MMcf/d)11.111.9TotalProduction(MBOE/d)610.7595.4EffectiveRoyaltyRate(5)(percent)FosterCreek 24.0 25.1ChristinaLake

182、27.3 29.5Sunrise 6.1 6.8Lloydminster(6)11.7 9.5TotalEffectiveRoyaltyRate 21.0 21.9TransportationandBlendingExpense(7)($/BOE)9.008.18OperatingExpense(7)($/BOE)11.4012.54Per-UnitDD&A(7)($/BOE)13.4912.94(1)Bitumen,heavycrudeoilandnaturalgas.(2)Containsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialM

183、easuresAdvisory.(3)OilSandsproductionisprimarilybitumen,exceptforLloydminsterconventionalheavyoil,whichisheavycrudeoil.(4)Conventionalnaturalgasproducttype.(5)Effective royalty rates are equal to royalty expense divided by product revenue,net of transportation expenses,excluding realized(gain)loss o

184、nriskmanagement.(6)ComposedofLloydminsterthermalandLloydminsterconventionalheavyoilassets.(7)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.RevenuesGrosssalesincreasedin2024comparedwith2023,duetoincreasedRealizedSalesPricesasaresultofthenarrowingoftheWTI-WCSandcondensate-WCSdiffe

185、rentialsfollowingthestartupofTMX,andincreasedsalesvolumes.PriceOurbitumenandheavyoilproductionmustbeblendedwithcondensatetoreduceitsviscosityinordertotransportittomarketthroughpipelines.WithinourNetbackcalculations,ourrealizedbitumenandheavyoilsalespriceexcludestheimpactofpurchasedcondensate;however

186、,itisinfluencedbythepriceofcondensate.Asthecostofcondensateusedforblendingincreasesrelativetothepriceofblendedcrudeoilorourblendratioincreases,ourrealizedbitumenandheavyoilsalespricedecreases.OurRealizedSalesPriceincreasedin2024,comparedwith2023,mainlyduetonarrowerWTI-WCSandcondensate-WCSdifferentia

187、ls,drivenbythestart-upofTMX.In2024,approximately33percent(202325percent)ofourcrudeoilsalesvolumesweresoldtodestinationsoutsideofAlbertaandapproximately20percent(202320percent)ofourOilSandscrudeoilsalesvolumesweresoldtoourCanadianandU.S.downstreamoperations.Cenovusmakesstorageandtransportationdecisio

188、nstouseourmarketingandtransportationinfrastructure,includingstorageand pipeline assets,in order to optimize product mix,delivery points,transportation commitments and customerdiversification.Topriceprotectourinventoriesassociatedwithstorageortransportdecisions,Cenovusmayemployvariouspricealignmentan

189、dvolatilitymanagementstrategies,includingriskmanagementcontracts,toreducevolatilityinfuturecashflowsandimprovecashflowstability.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis19CENOVUS ENERGY 2024 ANNUAL REPORT|21ProductionVolumesOilSandscrudeoilproductionincreasedin2024comparedwith2023dueto:L

190、esswelldowntimeandsuccessfulresultsfromoursustainingandoptimizationprogramsatFosterCreek.SuccessfulresultsfromourredevelopmentandoptimizationprogramsatourLloydminsterassets.Positiveresultsfromoursustaining,redevelopment,growthandoptimizationprogramsatSunrise.Theincreasewaspartiallyoffsetbyturnaround

191、activityinSeptember2024atChristinaLake.RoyaltiesRoyalty calculations for our Oil Sands segment are based on government prescribed royalty regimes in Alberta andSaskatchewan.OurAlbertaoilsandsroyaltyprojects(FosterCreek,ChristinaLakeandSunrise)arebasedongovernmentprescribedpre-andpost-payoutroyaltyra

192、tes,whicharedeterminedonaslidingscaleusingtheCanadiandollarequivalentWTIbenchmarkprice.Royaltiesforapre-payoutprojectarebasedonamonthlycalculationthatappliesaroyaltyrate(rangingfromonepercenttoninepercent,basedontheCanadiandollarequivalentWTIbenchmarkprice)tothegrossrevenuesfromtheproject.Royaltiesf

193、orapost-payoutprojectarebasedonanannualizedcalculationwhichusesthegreaterof:(1)thegrossrevenuesmultipliedbytheapplicableroyaltyrate(onepercenttoninepercent,basedontheCanadiandollarequivalentWTIbenchmarkprice);or(2)thenetrevenuesoftheprojectmultipliedbytheapplicableroyaltyrate(25percentto40percent,ba

194、sedontheCanadiandollarequivalentWTIbenchmarkprice).Grossrevenuesareafunctionofsalesrevenueslessdiluentcostsandtransportation costs.Net revenues are calculated as sales revenues less diluent costs,transportation costs,and allowedoperatingandcapitalcosts.FosterCreekandChristinaLakearepost-payoutprojec

195、tsandSunriseisapre-payoutproject.ForourSaskatchewanassets,LloydminsterthermalandLloydminsterconventionalheavyoil,royaltycalculationsarebasedonanannualratethatisappliedtoeachproject,whichincludeseachprojectsCrownandfreeholdsplit.ForCrownroyalties,thepre-payoutcalculationisbasedononepercentofproductre

196、venuesandthepost-payoutcalculationisbasedon20percentofoperatingmargin.Thefreeholdcalculationislimitedtopost-payoutprojectsandisbasedonaneightpercentrate.In2024,OilSandsroyaltiesincreasedcomparedwith2023,primarilyduetohigherrealizedpricingandsalesvolumes.TheOilSandseffectiveroyaltyratedecreasedslight

197、lyprimarilyduetoannualadjustmentsontheend-of-periodfilings,partiallyoffsetbyhigherrealizedpricescomparedwith2023.ExpensesTransportationandBlendingIn2024,blendingexpensesincreased$6millioncomparedwith2023,duetohighersalesvolumespartiallyoffsetbylowercondensateprices.In2024,transportationexpensesandpe

198、r-unittransportationexpensesincreased,comparedwith2023,duetohighersalesvolumesexportedtodestinationsoutsideofAlberta,whichincludestransportationcostsrelatedtoouruseofTMX,andincreasedpipelinetransportationratesonshipmentstoU.S.destinations.Per-UnitTransportationExpenses(1)($/BOE)20242023FosterCreek13

199、.5711.98ChristinaLake6.536.69Sunrise16.0712.47Lloydminster(2)3.953.51TotalOilSands9.008.18(1)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(2)IncludesLloydminsterthermalandLloydminsterconventionalheavyoilassets.AtFosterCreek,per-unittransportationexpensesincreasedprimarilyduetoh

200、ighercostsasaresultofthestart-upofTMX,partiallyoffsetbylowerrailtransportationcosts.In2024,wehadWestCoastsalesof20percentandvolumessoldtoU.S.destinationsof37percent,adecreasefrom44percentofsalestoU.S.destinationsin2023.AtChristinaLake,per-unittransportationexpensesdecreasedprimarilyduetolowerrailcos

201、ts,partiallyoffsetbyincreasedpipeline transportation costs.In 2024,we shipped 18 percent(2023 18 percent)of Christina Lake volumes to U.S.destinations.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis2022|CENOVUS ENERGY 2024 ANNUAL REPORTAtSunrise,per-unittransportationexpensesincreasedprimarily

202、duetotheuseofTMXandincreasedsalesvolumestoU.S.destinations.In2024,salestoU.S.destinationsincreasedto67percentfrom50percentin2023.Inaddition,18percentofsaleswereontheWestCoastduetotheuseofTMXin2024.AtLloydminster,per-unittransportationexpensesincreasedprimarilyduetohigherpipelinetransportationratesan

203、dincreasedsalesoutsideofAlberta.WeshippedthreepercenttoU.S.destinations(2023nosalestoU.S.destinations)andapproximately55percentofproductiontoourCanadianRefiningoperations.OperatingPrimarydriversofouroperatingexpensesin2024werefuel,repairsandmaintenance,andworkforce.Totaloperatingexpensesin2024decrea

204、sedcomparedwith2023,duetolowerfuelcostsasaresultofsignificantdeclinesinAECObenchmarkprices.ThedecreaseswerepartiallyoffsetbyhigherrepairsandmaintenancecostsandGHGcompliancecosts.Wehaveexperiencedsomeinflationarypressuresonourcosts;however,wemanageourcostsbysecuringlong-termcontracts,workingwithvendo

205、rsandpurchasinglong-leaditemstomitigatefuturecostescalations.Per-UnitOperatingExpenses(1)($/BOE)2024PercentChange2023FosterCreekFuel2.10(40)3.48Non-Fuel7.77(2)7.96Total9.87(14)11.44ChristinaLakeFuel2.09(30)2.98Non-Fuel6.54 185.54Total8.63 18.52SunriseFuel2.89(40)4.78Non-Fuel11.47(6)12.24Total14.36(1

206、6)17.02Lloydminster(2)Fuel2.74(40)4.54Non-Fuel14.78(6)15.78Total17.52(14)20.32TotalOilSandsFuel2.30(36)3.60Non-Fuel9.10 28.94Total11.40(9)12.54(1)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(2)IncludesLloydminsterthermalandLloydminsterconventionalheavyoilassets.Per-unitfuelexp

207、ensesdecreasedoverallduetosignificantlylowernaturalgasprices,asdiscussedabove.FosterCreekper-unitnon-fuelexpensesslightlydecreasedin2024,comparedwith2023,duetolowerelectricitycostsandincreasedsalesvolumes,partiallyoffsetbyincreasedworkoveractivityandGHGcompliancecosts.ChristinaLakeper-unitnon-fuelex

208、pensesincreasedin2024,comparedwith2023,duetohigherturnaroundactivity,workoveractivityandGHGcompliancecosts.Sunrise per-unit non-fuel expenses decreased in 2024,compared with 2023,due to increased sales volumes and lowerelectricitycosts,partiallyoffsetbyincreasedrepairsandmaintenancecosts.Lloydminste

209、rper-unitnon-fuelexpensesdecreasedin2024,comparedwith2023,duetoincreasedsalesvolumescombinedwithlowerchemicalcostsandworkoveractivity,partiallyoffsetbyincreasedGHGcompliancecosts.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis21CENOVUS ENERGY 2024 ANNUAL REPORT|23Netback(1)($/BOE)20242023Sales

210、Price80.2073.02Royalties14.9214.20TransportationandBlending9.008.18OperatingExpenses11.4012.54Netback44.8838.10(1)Containsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.ConventionalIn2024,we:Deliveredsafeandreliableoperations,includingsafelyexecutingturnarounds.Produced119.9thous

211、andBOEperday(2023119.9thousandBOEperday).GeneratedOperatingMarginof$291million,adecreaseof$292millionfrom2023,primarilyduetolowernaturalgasbenchmarkprices.AveragedaNetbackof$6.48perBOE(2023$12.02perBOE).Investedcapitalof$421millionwithacontinuedfocusondrilling,completion,tie-inandinfrastructureproje

212、cts.FinancialResults($millions)20242023GrossSalesExternalSales1,2111,488IntersegmentSales1,8481,7853,0593,273Royalties(76)(112)Revenues2,9833,161ExpensesPurchasedProduct1,8231,695TransportationandBlending320298Operating555590Realized(Gain)LossonRiskManagement(6)(5)OperatingMargin291583Unrealized(Gai

213、n)LossonRiskManagement4(19)Depreciation,DepletionandAmortization442386ExplorationExpense16(Income)LossFromEquity-AccountedAffiliates2SegmentIncome(Loss)(158)210CenovusEnergyInc.2024ManagementsDiscussionandAnalysis2224|CENOVUS ENERGY 2024 ANNUAL REPORTOperatingMarginVarianceYearEndedDecember31,2024($

214、millions)583(288)36(36)44(48)291YearEndedDecember31,2023Price(1)RoyaltiesTransportationandBlendingOperatingExpensesOther(2)YearEndedDecember31,2024200400600800(1)Changestopriceincludetheimpactofrealizedriskmanagementgainsandlosses.(2)ReflectsOperatingMarginfromprocessingfacilities.OperatingResults20

215、242023TotalSalesVolumes(MBOE/d)119.9119.9RealizedSalesPrice(1)($/BOE)25.1831.76LightCrudeOil($/bbl)92.68101.34NGLs($/bbl)54.6248.25ConventionalNaturalGas($/Mcf)2.513.91ProductionbyProductLightCrudeOil(Mbbls/d)4.95.9NGLs(Mbbls/d)21.021.7ConventionalNaturalGas(MMcf/d)563.8554.1TotalProduction(MBOE/d)1

216、19.9119.9ConventionalNaturalGasProduction(percentageoftotal)7877CrudeOilandNGLsProduction(percentageoftotal)2223EffectiveRoyaltyRate(2)(percent)10.3 10.8TransportationExpense(3)($/BOE)4.984.16OperatingExpense(3)($/BOE)11.9913.02Per-UnitDD&A(3)($/BOE)9.908.76(1)Containsanon-GAAPfinancialmeasure.Seeth

217、eSpecifiedFinancialMeasuresAdvisory.(2)Effective royalty rates are equal to royalty expense divided by product revenue,net of transportation expenses,excluding realized(gain)loss onriskmanagement.(3)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.RevenuesGrosssalesdecreasedin2024c

218、omparedwith2023,duetodecreasedbenchmarkpricing.PriceOurtotalRealizedSalesPricedecreasedin2024,comparedwith2023,primarilyduetolowernaturalgasbenchmarkprices.FortheyearendedDecember31,2024,theAECOnaturalgasbenchmarkpricedeclined45percentcomparedwith2023.CenovusEnergyInc.2024ManagementsDiscussionandAna

219、lysis23CENOVUS ENERGY 2024 ANNUAL REPORT|25ProductionVolumesProductionvolumeswereconsistentin2024,comparedwith2023.In2024,productionincreasedduetolesswelldowntimecompared with 2023,partially offset by the divestiture of non-core assets.Well downtime in 2024 related to plannedturnaroundactivityinthet

220、hirdquarter,while2023downtimewasprimarilyinresponsetowildfireactivity.Inthesecondhalfof2024,productionwasimpactedbythedeferralofnewwelldevelopmentinresponsetolowernaturalgasbenchmarkprices.RoyaltiesTheConventionalassetsaresubjecttoroyaltyregimesinAlbertaandBritishColumbia.Royaltiesdecreasedin2024,co

221、mparedwith2023,primarilyduetolowernaturalgasbenchmarkprices.ExpensesTransportationOurtransportationexpensesreflectchargesforthemovementofcrudeoil,NGLsandnaturalgasfromthepointofproductiontowheretheproductissold.In2024,transportationexpensesandper-unittransportationexpensesincreasedprimarilyduetoincr

222、easedpipelinetransportationrates,comparedwith2023.OperatingPrimarydriversofoperatingexpensesin2024wererepairsandmaintenance,workforceandpropertytaxcosts.Totaloperatingexpenseandper-unitoperatingcostsdecreasedcomparedwith2023,primarilyduetolowerprocessingandgatheringcosts,electricitycostsandworkoverc

223、osts,partiallyoffsetbyincreasedrepairsandmaintenancecostsdrivenbyhigherturnaroundactivity.In2024,wecompletedfiveturnaroundsinourConventionalsegmentandincurred$40millioninturnaroundcosts(2023$9million).Per-unitoperatingexpensesexcludingturnaroundcostswere$11.08perBOE(2023$12.82perBOE).Netback(1)($/BO

224、E)20242023SalesPrice25.1831.76Royalties1.732.56TransportationandBlending4.984.16OperatingExpenses11.9913.02Netback6.4812.02(1)Containsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.OffshoreIn2024,we:Deliveredsafeandreliableoperations.Produced66.6thousandBOEperdayoflightcrudeoil,N

225、GLsandnaturalgas(202363.4thousandBOEperday).GeneratedOperatingMarginof$1.0billion,adecreaseof$79millionfrom2023,primarilyduetolowerRealizedSalesPriceandincreasedoperatingexpenses.AveragedaNetbackof$52.38perBOE(2023$56.48perBOE).Investedcapitalof$1.1billion,mainlyrelatedtotheprogressionoftheWestWhite

226、RoseprojectandtheexecutionoftheSeaRoseALEproject.InlateDecember2023,wesuspendedproductionattheWhiteRosefieldaswepreparedfortheSeaRoseALEproject.Refitworkthatcommencedinthefirstquarterof2024wascompletedandthevesselreturnedtothefieldinNovember.TheSeaRoseFPSOisonstationandreconnectedtotheWhiteRosefield

227、.ProductionisexpectedtoresumelateFebruary2025.WehavemadesignificantprogressontheWestWhiteRoseprojectandweareontracktodeliverfirstoilin2026.Theprojectisapproximately88percentcompleteandmechanicalcompletionofthetopsidesandconcretegravitystructureoccurredinthefourthquarter.Thefocusin2025willbeoninstall

228、ationandcommissioningoftheplatformaswepreparetotransitiontheprojectfromconstructiontooperations.Sinceourdecisionin2022torestarttheproject,wehaveinvestedapproximately$1.6billion.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis2426|CENOVUS ENERGY 2024 ANNUAL REPORTFinancialResults20242023($millio

229、ns)AtlanticAsiaPacificOffshoreAtlanticAsiaPacificOffshoreGrossSalesExternalSales3221,2501,5724001,2171,617IntersegmentSales3221,2501,5724001,2171,617Royalties(2)(97)(99)(15)(84)(99)Revenues3201,1531,4733851,1331,518ExpensesTransportationandBlending11111616Operating290133423262122384OperatingMargin(1

230、)191,0201,0391071,0111,118Depreciation,DepletionandAmortization563487ExplorationExpense6617(Income)LossfromEquity-AccountedAffiliates(53)(57)SegmentIncome(Loss)463671(1)AtlanticandAsiaPacificOperatingMarginarenon-GAAPfinancialmeasures.SeetheSpecifiedFinancialMeasuresAdvisory.OperatingMarginVarianceY

231、earEndedDecember31,2024($millions)1,118(66)215(56)171,039YearEndedDecember31,2023PriceVolumeTransportationandBlendingOperatingExpensesOtherYearEndedDecember31,20245001,0001,500CenovusEnergyInc.2024ManagementsDiscussionandAnalysis25CENOVUS ENERGY 2024 ANNUAL REPORT|27OperatingResults20242023SalesVolu

232、mesAtlantic(Mbbls/d)8.09.6AsiaPacific(MBOE/d)China42.640.5Indonesia(1)16.014.7TotalAsiaPacific58.655.2TotalSalesVolumes(MBOE/d)66.664.8RealizedSalesPrice(1)(2)($/BOE)78.4081.63Atlantic-LightCrudeOil($/bbl)109.58113.74AsiaPacific(1)($/BOE)74.1376.04NGLs($/bbl)97.5999.73ConventionalNaturalGas($/Mcf)11

233、.4511.71ProductionbyProductAtlanticLightCrudeOil(Mbbls/d)8.08.2AsiaPacific(1)NGLs(Mbbls/d)11.010.8ConventionalNaturalGas(MMcf/d)285.3266.6TotalAsiaPacific(MBOE/d)58.655.2TotalProduction(MBOE/d)66.663.4EffectiveRoyaltyRate(3)(percent)Atlantic 0.7 3.7AsiaPacific(1)9.5 10.3OperatingExpense(2)($/BOE)19.

234、2717.20Atlantic(4)97.7067.93AsiaPacific(1)(2)8.528.37Per-UnitDD&A(4)($/BOE)22.3325.57(1)Reportedsalesvolumes,associatedper-unitvaluesandroyaltyratesreflectCenovuss40percentequityinterestintheHCMLjointventure.TheHCMLjointventureisaccountedforusingtheequitymethodintheConsolidatedFinancialStatements.(2

235、)Containsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(3)Effective royalty rates are equal to royalty expense divided by product revenue,net of transportation expenses,excluding realized(gain)loss onriskmanagement.(4)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdv

236、isory.RevenuesGrosssalesdecreasedin2024,comparedwith2023,duetoadecreaseinRealizedSalesPriceresultingfromlowerBrentbenchmarkpricing,partiallyoffsetbyanincreaseinsalesvolumesinChina.PriceOurAtlanticRealizedSalesPriceonlightcrudeoildecreasedin2024,comparedwith2023,duetolowerBrentbenchmarkpricing.Thepri

237、ceswereceivefornaturalgassoldinAsiaPacificaresetunderlong-termcontracts.ProductionVolumesAtlanticproductiondecreasedin2024,comparedwith2023,primarilyduetothesuspensionofproductionattheWhiteRosefieldinDecember2023fortheSeaRoseALEproject,partiallyoffsetbyresumingproductionattheTerraNovafieldinNovember

238、2023.LightcrudeoilproductionfromtheWhiteRoseandTerraNovafieldsareoffloadedfromtheSeaRoseandTerraNovaFPSOs,respectively,to tankers and stored at an onshore terminal before shipment to buyers,which results in a timingdifferencebetweenproductionandsales.AsiaPacificproductionincreasedin2024,comparedwith

239、2023,duetolesswelldowntimeinChinaandhigherproductionfromtheMACfieldinIndonesiathatcameonlineinSeptember2023.In2023,welldowntimewasduetothetemporaryunplannedoutagethatoccurredinthesecondquarterof2023,relatedtothedisconnectionoftheumbilicalbyathird-partyvessel.CenovusEnergyInc.2024ManagementsDiscussio

240、nandAnalysis2628|CENOVUS ENERGY 2024 ANNUAL REPORTRoyaltiesFortheyearendedDecember31,2024,Atlanticroyaltiesandtheeffectiveroyaltyratedecreasedcomparedwith2023.ThedecreaseswereduetosuspendedproductionattheWhiteRosefieldforallof2024,whichhasahighereffectiveroyaltyrate.Allproductionin2024wasattheTerraN

241、ovafieldwithalowereffectiveroyaltyrate.RoyaltyratesinAsiaPacificaregovernedbyproduction-sharingcontracts,inwhichproductionissharedwiththeChineseandIndonesiangovernments.TheeffectiveroyaltyrateforAsiaPacificfor2024declinedcomparedwith2023,primarilyduetoaproductionbonuspaidtotheGovernmentofIndonesiafo

242、rachievingaproductionmilestoneinthefirstquarterof2023,partiallyoffsetbyaconsumptiontaximplementedinChinainJune2023andineffectforthefullyearof2024.ExpensesTransportationTransportationexpensesincludethecostsoftransportingcrudeoilfromtheTerraNovaFPSOandSeaRoseFPSOvesselstoonshoreterminalsviatankers,asw

243、ellasstoragecosts.TransportationexpensesfortheyearendedDecember31,2024,were$11million(2023$16million).OperatingPrimarydriversofourAtlanticoperatingexpensesin2024wererepairsandmaintenance,costsrelatedtovesselsandairservices,andworkforce.Operatingexpensesincreasedcomparedwith2023,primarilyduetohigherr

244、epairsandmaintenanceandvesselmooringcostsrelatedtotheSeaRoseALEproject,andhigherrepairsandmaintenancecostsattheTerraNovafield.Per-unitoperatingexpensesincreasedin2024comparedwith2023,mainlyduetothesamefactorsdiscussedaboveandlowersalesvolumes.PrimarydriversofourChinaoperatingexpensesin2024wererepair

245、sandmaintenance,workforcecostsandinsurance.FortheyearendedDecember31,2024,operatingexpensesincreasedcomparedwith2023,primarilyduetohigherinsurancecosts,workforce,andrepairsandmaintenancecosts.Per-unitoperatingexpensesincreasedcomparedwith2023,mainlyduetothefactorsdiscussedabove,partiallyoffsetbyhigh

246、ersalesvolumes.FortheyearendedDecember31,2024,Indonesiaper-unitoperatingexpensesincreasedcomparedwith2023,duetoincreasedrepairsandmaintenancecostsandworkforcecosts,partiallyoffsetbyhighersalesvolumes.Netbacks(1)2024($/BOE,exceptwhereindicated)Atlantic($/bbl)ChinaIndonesiaTotalOffshore(2)SalesPrice10

247、9.5880.2657.8278.40Royalties0.726.199.326.29TransportationandBlending3.810.46OperatingExpenses97.707.6110.9319.27Netback7.3566.4637.5752.382023($/BOE,exceptwhereindicated)Atlantic($/bbl)ChinaIndonesiaTotalOffshore(2)SalesPrice113.7482.1459.1681.63Royalties4.245.6813.757.29TransportationandBlending4.

248、440.66OperatingExpenses67.937.5110.7617.20Netback37.1368.9534.6556.48(1)Containsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(2)Reportedsalesvolumesandassociatedper-unitvaluesreflectCenovuss40percentequityinterestintheHCMLjointventure.TheHCMLjointventureisaccountedforusingtheeq

249、uitymethodintheConsolidatedFinancialStatements.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis27CENOVUS ENERGY 2024 ANNUAL REPORT|29DOWNSTREAMCanadianRefiningIn2024,we:Deliveredsafeandreliableoperations.SafelycompletedthelargestturnaroundintheUpgradershistory,whichcommencedinMayandrampeduptofu

250、lloperationsinJuly.Achievedcrudeunitutilizationof84percentwiththroughputof90.5thousandbarrelsperday(202393percentand100.7thousandbarrelsperday,respectively).Incurredper-unitoperatingexpensesexcludingturnaroundcostsof$15.38perbarrel(2023$13.29perbarrel).RecordedanOperatingMarginshortfallof$80million,

251、adecreaseof$755millionfrom2023,mainlyduetolowerproductionvolumesduetotheturnaroundandlowercommodityprices.Investedcapitalof$208million,primarilyfocusedonsustainingactivities.FinancialandOperatingResults($millions,exceptwhereindicated)20242023GrossSalesExternalSales4,7875,385IntersegmentSales523848Re

252、venues5,3106,233PurchasedProduct4,4834,919GrossMargin(1)8271,314ExpensesOperating907639OperatingMargin(80)675Depreciation,DepletionandAmortization185185SegmentIncome(Loss)(265)490OperableCapacity(2)(Mbbls/d)108.0108.0TotalProcessedInputs(3)(Mbbls/d)96.6107.1CrudeOilUnitThroughput(Mbbls/d)90.5100.7Cr

253、udeUnitUtilization(4)(percent)84 93TotalProduction(Mbbls/d)103.1114.2SyntheticCrudeOil41.047.6Asphalt15.715.4Diesel10.812.9Other30.833.3Ethanol4.85.0RefiningMargin(1)($/bbl)20.8230.13(1)Non-GAAPfinancialmeasureorcontainsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.Revenuesfromt

254、heUpgrader,commercialfuelsbusinessandtheLloydminsterRefineryfortheyearendedDecember31,2024,were$5.0billion(2023$5.8billion).(2)Operablecapacityisthecapacitybasedonthroughputbarrelspercalendarday.Itistheamountofinputthatadistillationfacilitycanprocessunderusualoperatingconditions.Wepreviouslyreported

255、crudeoilnameplatecapacity.SeetheAbbreviationsandDefinitionssectionofthe Advisory.(3)Totalprocessedinputsincludecrudeoilandotherfeedstocks.Blendingisexcluded.(4)Crudeunitutilizationiscalculatedascrudeoilunitthroughputdividedbyoperablecapacity.Priorperiodshavebeenre-presentedtoalignwiththiscalculation

256、.In2024,throughputandproductionwereloweratourCanadianRefiningassetscomparedwith2023,primarilyduetotheplannedturnaroundattheUpgraderthatranfromearlyMaytoearlyJulyandtheramp-uptofulloperationsthatfollowed.Revenues,GrossMarginandRefiningMarginThe Upgrader processes blended heavy crude oil and bitumen i

257、nto high-value synthetic crude oil and low-sulphur diesel.Revenuesaredependentonthesalespriceofsyntheticcrudeoilanddiesel.UpgradingGrossMarginisprimarilydependentonthedifferentialbetweenthesalespriceofsyntheticcrudeoilanddiesel,andthecostofheavycrudeoilandbitumenfeedstock.CenovusEnergyInc.2024Manage

258、mentsDiscussionandAnalysis2830|CENOVUS ENERGY 2024 ANNUAL REPORTTheLloydminsterRefineryprocessesblendedheavycrudeoilintoasphalt,bulkdistillatesandindustrialproducts.GrossMarginislargelydependentonasphaltandindustrialproductspricingandthecostofheavycrudeoilfeedstock.SalesfromtheLloydminsterRefineryar

259、eseasonalandincreaseduringpavingseason,whichtypicallyrunsfromMaythroughOctobereachyear.TheUpgraderandLloydminsterRefinerysourcecrudeoilfeedstockfromourOilSandssegment.In2024,approximately12percent of total crude oil sales volumes from our Oil Sands assets were sold to our Canadian Refining segment(2

260、023 13percent).Revenues decreased compared with 2023,due to decreased synthetic crude oil and diesel benchmark prices and lowerproduction,asdiscussedabove.GrossMarginandper-barrelRefiningMargindecreasedcomparedwith2023,duetolowersalesprices,lowerproductionandhigherfeedstockcosts.OperatingExpensesThe

261、followingtableanddiscussionrepresentoperatingexpensesassociatedwiththeUpgrader,theLloydminsterRefineryandthecommercialfuelsbusiness.($millions,exceptwhereindicated)20242023OperatingExpenses-UpgradingandRefining798524OperatingExpensesExcludingTurnaroundCosts544520OperatingExpensesTurnaroundCosts2544P

262、er-UnitOperatingExpenses(1)($/bbl)22.5613.40Per-UnitOperatingExpensesExcludingTurnaroundCosts(1)15.3813.29Per-UnitOperatingExpensesTurnaroundCosts(1)7.180.11(1)Specifiedfinancialmeasure.Per-unitmetricsarecalculatedontotalprocessedinputs.Changesinmetricsfrompriorperiodshavebeenre-presented.SeetheSpec

263、ifiedFinancialMeasuresAdvisory.Primarydriversofoperatingexpenseswereturnaroundcosts,workforcecosts,andrepairsandmaintenance.In2024,operatingexpenses excluding turnaround costs increased compared with 2023,primarily due to projects related to reliability thatoccurredduringtheturnaroundperiodattheUpgr

264、ader.Theincreaseinoperatingexpenses,combinedwithdecreasedtotalprocessedinputs,resultedinincreasedper-unitoperatingexpensescomparedwith2023.U.S.RefiningIn2024,we:Deliveredsafeoperations.SafelycompletedasignificantturnaroundattheLimaRefinerythatranfromearlySeptemberuntillateOctober.Achievedcrudeunitut

265、ilizationof91percent(202378percent)andincreasedthroughputto556.4thousandbarrelsperdaycomparedwith459.7thousandbarrelsperdayin2023.Achievedper-unitoperatingexpensesexcludingturnaroundcostsof$11.55perbarrel(2023$14.01perbarrel).RecordedanOperatingMarginshortfallof$232million,adecreaseof$709millionfrom

266、2023.Thedecreasewasprimarilyduetolowermarketcrackspreadsyear-over-yearwithasharpdeclineinthefourthquarter,anarrowerWTI-WCSdifferentialatHardistyandtheimpactoftheturnaroundattheLimaRefinery,partiallyoffsetbythelowercostofRINs.Invested capital of$488 million,primarily focused on sustaining activities

267、at our operated assets and refiningreliabilityprojectsatournon-operatedassets.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis29CENOVUS ENERGY 2024 ANNUAL REPORT|31FinancialandOperatingResults($millions,exceptwhereindicated)20242023GrossSalesExternalSales28,29926,376IntersegmentSales917Revenues

268、28,30826,393PurchasedProduct25,76923,354GrossMargin(1)2,5393,039ExpensesOperating2,7632,562Realized(Gain)LossonRiskManagement8OperatingMargin(232)477Unrealized(Gain)LossonRiskManagement8(17)Depreciation,DepletionandAmortization462486SegmentIncome(Loss)(702)8OperableCapacity(2)(Mbbls/d)612.3612.3Tota

269、lProcessedInputs(3)(Mbbls/d)581.4479.7CrudeOilUnitThroughput(Mbbls/d)556.4459.7HeavyCrudeOil219.6173.9Light/MediumCrudeOil336.8285.8CrudeUnitUtilization(4)(5)(percent)91 78TotalRefinedProductProduction(Mbbls/d)590.0485.0Gasoline280.5231.2Distillates(6)209.1167.0Asphalt28.319.8Other72.167.0RefiningMa

270、rgin(1)($/bbl)11.9317.36WeightedAverageCrackSpread,NetofRINs(7)(US$/bbl)13.0118.15WeightedAverageCrackSpread,NetofRINs(7)(C$/bbl)17.8224.49MarketCapture(1)(5)(8)(percent)67 71(1)Non-GAAPfinancialmeasureorcontainsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(2)Operablecapacityis

271、thecapacitybasedonthroughputbarrelspercalendarday.Itistheamountofinputthatadistillationfacilitycanprocessunderusualoperatingconditions.Wepreviouslyreportedcrudeoilnameplatecapacity.SeetheAbbreviationsandDefinitionssectionofthe Advisory.(3)Totalprocessedinputsincludecrudeoilandotherfeedstocks.Blendin

272、gisexcluded.(4)Crudeunitutilizationiscalculatedascrudeoilunitthroughputdividedbyoperablecapacity.Priorperiodshavebeenre-presentedtoalignwiththiscalculation.(5)TheSuperiorRefinerysoperablecapacityisincludedinthemetricseffectiveApril1,2023.TheToledoRefineryincludesaweightedaverageoperablecapacityinthe

273、metrics,asfullownershipoftheToledoRefinerywasacquiredonFebruary28,2023.(6)Includesdieselandjetfuel.(7)Weightedaveragecrackspread,netofRINsiscalculatedasCenovussoperablecapacity-weightedaverageoftheChicagoandGroup33-2-1benchmarkmarketcrackspreads,netofRINs.Averageforeignexchangeratesintheperiodareuse

274、dtoconverttoCanadiandollars.(8)ThedefinitionofMarketCaptureisRefiningMargindividedbytheweightedaveragecrackspread,netofRINs,expressedasapercentage.Throughputandrefinedproductproductionincreasedin2024,comparedwith2023,primarilyduetofulloperationsfromtheToledoAcquisitionandtheramp-upoftheSuperiorRefin

275、eryin2023,combinedwithimprovedreliabilityacrossourU.S.Refiningoperations.TheincreaseswerepartiallyoffsetbytheturnaroundattheLimaRefineryandunplannedoutagesatourrefineriesthroughouttheyear.WewereabletopartiallymitigatetheimpactoftheLimaRefineryturnaroundonproductionbyprocessingLimaintermediateproduct

276、satourToledoRefinery,allowingtheLimaRefineryscrudeunittocontinueoperations.Inaddition,wecompletedaturnaroundatthenon-operatedBorgerRefineryin2024,comparedwithtwoturnaroundsin2023.RevenuesRevenuesincreasedin2024,comparedwith2023,duetohighersalesvolumes.Theincreasewaspartiallyoffsetbydeclinesinbenchma

277、rkgasolineanddieselpricesofeightpercentand11percent,respectively,comparedwith2023.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis3032|CENOVUS ENERGY 2024 ANNUAL REPORTGrossMarginandMarketCaptureMarketcrackspreadsdonotpreciselymirrortherefineryconfigurationforcrudedietandproductyields,ortheloca

278、tionwesellproduct;however,theyareusedasageneralmarketindicator.Whilemarketcrackspreadsareanindicatorofmarginfromprocessingcrudeoilintorefinedproducts,therefiningrealizedcrackspread,whichistheGrossMarginonaper-barrelbasis,isaffectedbymanyfactors.Someofthesefactorsincludethetypeofcrudeoilfeedstockproc

279、essed;refineryconfigurationandtheproportionofgasoline,distillatesandsecondaryproductoutput;thetimelagbetweenthepurchaseofcrudeoilfeedstockandtheprocessingofthatcrudeoilthroughtherefineries;andthecostoffeedstock.ProcessinglessexpensivecruderelativetoWTIcreatesafeedstockcostadvantage.Ourfeedstockcosts

280、arevaluedonaFIFOaccountingbasis.Gross Margin decreased 16 percent in 2024 compared with 2023,primarily due to lower market crack spreads and the21percentnarrowerWTI-WCSdifferentialatHardistyduetothestart-upofTMX,whichincreasedthecostofheavycrudeenteringourrefineries.TheChicago3-2-1crackspreaddecreas

281、ed31percentandtheGroup33-2-1crackspreaddecreased43percent,comparedwith2023.Thesefactors,combinedwiththeincreaseintotalprocessedinputscomparedwith2023,alsodecreasedourper-barrelRefiningMargin.MarketCaptureistheRefiningMargin,calculatedonaFIFObasisofaccounting,generatedasapercentageoftheweightedaverag

282、emarketcrackspread,netofRINs.TheChicagoandGroup33-2-1marketcrackspreadsareusedtocalculateMarketCapture,withaheavierweightingtowardsChicago3-2-1.In 2024,Market Capture decreased compared with 2023,primarily due to the narrowing of the WTI-WCS differential atHardisty,asdiscussedabove.OperatingExpenses

283、($millions,exceptwhereindicated)20242023OperatingExpenses2,7632,562OperatingExpensesExcludingTurnaroundCosts2,4572,454OperatingExpensesTurnaroundCosts306108Per-UnitOperatingExpenses(1)($/bbl)12.9914.63Per-UnitOperatingExpensesExcludingTurnaroundCosts(1)11.5514.01Per-UnitOperatingExpensesTurnaroundCo

284、sts(1)1.440.62(1)Specifiedfinancialmeasure.Per-unitmetricsarecalculatedontotalprocessedinputs.Changesinmetricsfrompriorperiodshavebeenre-presented.SeetheSpecifiedFinancialMeasuresAdvisory.Primarydriversofoperatingexpenseswererepairsandmaintenance,workforceandturnaroundcosts.In2024,operatingexpensesi

285、ncreasedmainlyduetothesignificantturnaroundattheLimaRefinery.In2023,turnaroundswerecompletedatthenon-operatedWoodRiverandBorgerrefineries.TheincreaseinoperatingexpenseswasalsoduetoobtainingfullownershipoftheToledoRefineryin2023.Per-unitoperatingexpensesdecreasedprimarilyduetohighertotalprocessedinpu

286、ts,partiallyoffsetbyhigheroperatingexpenses,asdiscussedabove.Operatingexpensesexcludingturnaroundcostswererelativelyconsistentcomparedwith2023,primarilyduetotheToledoAcquisition,as discussed above,offset by a decrease in repairs and maintenance expenses following the completion ofcommissioningandsta

287、rt-upactivitiesattheToledoandSuperiorrefineriesin2023.Per-unitoperatingexpensesexcludingturnaroundcostsdecreasedprimarilyduetohighertotalprocessedinputs.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis31CENOVUS ENERGY 2024 ANNUAL REPORT|33CORPORATEANDELIMINATIONSFinancialResults($millions)20242

288、023Realized(Gain)LossonRiskManagement24(3)Unrealized(Gain)LossonRiskManagement1673Depreciation,DepletionandAmortization102107GeneralandAdministrative794688FinanceCosts,Net(1)514538Integration,TransactionandOtherCosts16685ForeignExchange(Gain)Loss,Net462(67)(Gain)LossonDivestitureofAssets(1)(119)20Re

289、-measurementofContingentPayments3059Other(Income)Loss,Net(55)(63)(1)RevisedpresentationasofJanuary1,2024.RefertoNote4oftheConsolidatedFinancialStatementsforfurtherdetail.GeneralandAdministrativePrimarydriversofourgeneralandadministrativeexpensesin2024wereworkforcecostsandinformationtechnologyrelated

290、costs.Theincreaseingeneralandadministrativeexpenseswasprimarilyduetohigherinformationtechnologyandsoftwarecosts,andhigherpeoplecosts.FinanceCosts,NetNetfinancecostswerelowercomparedwith2023,primarilyduetolowerinterestexpensesonlong-termdebtandhigherinterestincomein2024,partiallyoffsetbythediscounton

291、theredemptionoflong-termdebtfromthepurchaseofUS$1.0billionofunsecurednotesin2023.RefertotheLiquidityandCapitalResourcessectionofthisMD&Aforfurtherdetailsonlong-termdebt.Theannualizedweightedaverageinterestrateonoutstandingdebtfor2024was4.5percent(20234.7percent).Integration,TransactionandOtherCostsI

292、n2024,weincurredcostsof$166million,primarilyrelatedtomodernizingandreplacingcertaininformationtechnologysystems,optimizing business processes and standardizing data across the Company.We are recalibrating work on thepreviously announced enterprise-wide IT systems upgrades to a more fit for purpose o

293、utcome and have deferred theenterprise-wideupgradespost2025.In2023,weincurredtransactionandintegrationcostsof$85million,primarilyrelatedtotheToledoAcquisition.ForeignExchange(Gain)Loss,Net($millions)20242023UnrealizedForeignExchange(Gain)Loss550(210)RealizedForeignExchange(Gain)Loss(88)143462(67)Unr

294、ealizedforeignexchangegainsandlosseswereprimarilyduetothetranslationofU.S.denominateddebt.In2024,realizedforeignexchangegainswereprimarilyrelatedtoworkingcapital.In2023,realizedforeignexchangelosseswereprimarilyrelatedtothepurchaseofU.S.denominatednotes.AsatDecember31,2024,theCanadiandollarwaseightp

295、ercentweakerrelativetotheU.S.dollaratDecember31,2023.(Gain)LossonDivestitureofAssetsTheCompanyclosedatransactionwithAthabascaOilCorporationtocreatethejointly-controlledDuvernay,inwhichweholda30percentequityinterestandisaccountedforusingtheequitymethodintheConsolidatedFinancialStatements.Werecordedab

296、efore-taxgainof$65milliononthetransaction.TheCompanyalsoclosedthesaleofnon-coreassetsinitsConventionalsegmentfornetproceedsof$39millionandrecordedabefore-taxgainof$51million.In2023,werecordedanon-cashrevaluationlossof$34millionaspartoftheToledoAcquisition.CenovusEnergyInc.2024ManagementsDiscussionan

297、dAnalysis3234|CENOVUS ENERGY 2024 ANNUAL REPORTRe-measurementofContingentPaymentsOnAugust31,2024,thevariablepaymentobligationassociatedwiththetransactionwithBPCanadaEnergyGroupULCtopurchase the remaining 50 percent interest in Sunrise Oil Sands Partnership ended,and the final payment was made inOcto

298、ber2024.Werecordedanon-cashremeasurementlossof$30millionassociatedwiththispaymentin2024(2023$59million).IncomeTaxes($millions)20242023CurrentTaxCanada1,1411,041UnitedStates9(109)AsiaPacific214224OtherInternational3925TotalCurrentTaxExpense(Recovery)1,4031,181DeferredTaxExpense(Recovery)(474)(250)929

299、931FortheyearendedDecember31,2024,werecordedcurrenttaxexpenserelatedtooperationsinalljurisdictionsinwhichweoperate.TheincreaseintotalcurrenttaxexpensewasprimarilyduetoacurrenttaxrecoveryintheU.S.in2023.Theeffectivetaxratefor2024was22.8percent(202318.5percent).Thehighereffectivetaxratein2024isprimari

300、lyduetonon-taxableforeignexchangelossesonlong-termdebtcomparedwithnon-taxableforeignexchangegainsin2023,pairedwithlowerU.S.basisrecognition.Oureffectivetaxrateisafunctionoftherelationshipbetweentotaltaxexpense(recovery)andtheamountofearnings(loss)beforeincometaxes.Theeffectivetaxratediffersfromthest

301、atutorytaxrateformanyreasons,includingbutnotlimitedto,differenttaxratesbetweenjurisdictions,non-taxableforeignexchange(gains)losses,adjustmentsforchangesintaxbasisandotherlegislation.InJune2024,theGlobalMinimumTaxActwasenactedinCanadatoimplementthenewglobalminimumtaxframework(“PillarTwo”),whichistob

302、eappliedretroactivelytofiscalperiodsbeginningonorafterDecember31,2023.TheCompanyissubjecttoPillarTwoandhasappliedthemandatorytemporaryexemptionofIAS12,“IncomeTaxes”andinturn,hasnotrecognizedtheimpactsofPillarTwointhedeferredincometaxcalculation.Taxinterpretations,regulationsandlegislationinthevariou

303、sjurisdictionsinwhichCenovusanditssubsidiariesoperatearesubjecttochange.Webelievethatourprovisionforincometaxesisadequate.Thereareusuallyanumberoftaxmattersunderreviewandwithconsiderationofthecurrenteconomicenvironment,incometaxesaresubjecttomeasurementuncertainty.Thetimingoftherecognitionofincomean

304、ddeductionsforthepurposeofcurrenttaxexpenseisdeterminedbyrelevanttaxlegislation.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis33CENOVUS ENERGY 2024 ANNUAL REPORT|35QUARTERLYRESULTS20242023($millions,exceptwhereindicated)Q4Q3Q2Q1Q4Q3Q2Q1AverageCommodityPrices(1)(US$/bbl)DatedBrent74.6980.1884.

305、9483.2484.0586.7678.3981.27WTI70.2775.0980.5776.9678.3282.2673.7876.13WCSatHardisty57.7161.5466.9657.6556.4369.3558.7451.36DifferentialWTI-WCSatHardisty12.5613.5513.6119.3121.8912.9115.0424.77Chicago3-2-1CrackSpread(2)12.1218.6218.7617.4513.2426.0628.5728.88Group33-2-1CrackSpread(2)12.6618.9518.1317

306、.5018.5536.9631.7831.35RINs4.023.893.393.684.777.427.728.20UpstreamProductionVolumesBitumen(Mbbls/d)608.6569.6591.7595.4595.1586.0554.6570.7HeavyCrudeOil(Mbbls/d)18.016.318.117.917.515.617.016.8LightCrudeOil(Mbbls/d)12.313.613.512.515.815.210.115.3NGLs(Mbbls/d)31.731.033.032.434.235.626.733.4Convent

307、ionalNaturalGas(MMcf/d)873.3844.6867.2855.8876.3867.4729.4857.0TotalProductionVolumes(MBOE/d)816.0771.3800.8800.9808.6797.0729.9779.0DownstreamTotalProcessedInputs(3)(Mbbls/d)700.5674.4652.9683.8605.7691.3566.9480.7CrudeOilUnitThroughput(3)(Mbbls/d)666.7642.9622.7655.2579.1664.3537.8457.9DownstreamP

308、roductionVolumes(3)(Mbbls/d)722.6685.2659.5702.1627.4706.0571.9487.7Revenues(4)12,81313,81914,58213,06313,13414,57712,23112,262OperatingMargin(5)2,2742,4082,9363,1912,1514,3692,4002,102OperatingMarginUpstream(6)2,6702,7313,0892,6312,4553,4472,2571,711OperatingMarginDownstream(6)(396)(323)(153)560(30

309、4)922143391CashFrom(Usedin)OperatingActivities2,0292,4742,8071,9252,9462,7381,990(286)AdjustedFundsFlow(5)1,6011,9602,3612,2422,0623,4471,8991,395PerShareBasic(5)($)0.881.061.271.201.101.821.000.73PerShareDiluted(5)($)0.871.051.261.191.081.810.980.71CapitalInvestment1,4781,3461,1551,0361,1701,0251,0

310、021,101FreeFundsFlow(5)1236141,2061,2068922,422897294ExcessFreeFundsFlow(5)(416)1467358324711,989505(499)NetEarnings(Loss)1468201,0001,1767431,864866636PerShareBasic($)0.080.440.530.620.390.980.450.33PerShareDiluted($)0.070.420.530.620.320.970.440.31TotalAssets56,53954,68056,00054,99453,91554,42753,

311、74754,000Long-TermDebt,IncludingCurrentPortion7,5347,1997,2757,2277,1087,2248,5348,681NetDebt4,6144,1964,2584,8275,0605,9766,3676,632CashReturnstoCommonandPreferredShareholders7061,0701,0344367311,225584258CommonSharesBaseDividends330329334262261264265200BaseDividendsPerCommonShare($)0.1800.1800.180

312、0.1400.1400.1400.1400.105CommonSharesVariableDividends251VariableDividendsPerCommonShare($)0.135PurchaseofCommonSharesUnderNCIB10873244016535036131040PaymentforPurchaseofWarrants111600DividendsPaidonPreferredShares189999918PreferredShareRedemption250(1)These benchmark prices are not our Realized Sal

313、es Prices and represent approximate values.For our average Realized Sales Prices and realizedriskmanagementresults,refertotheNetbacktablesintheUpstreamsectionofthisMD&A.(2)Theaverage3-2-1crackspreadisanindicatoroftherefiningmarginandisvaluedonalastin,firstoutaccountingbasis.(3)RepresentsCenovussneti

314、nterestinrefiningoperations.(4)2024comparativeperiodsreflectcertainrevisions.SeethePriorPeriodRevisionssectionofthe Advisory.(5)Non-GAAPfinancialmeasureorcontainsanon-GAAPfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.(6)Specifiedfinancialmeasure.SeetheSpecifiedFinancialMeasuresAdvisory.C

315、enovusEnergyInc.2024ManagementsDiscussionandAnalysis3436|CENOVUS ENERGY 2024 ANNUAL REPORTOurresultsforthefourthquarterreflectstrongoperationalperformanceintheupstreambusinessandimprovedperformancefromourrefiningoperationscomparedwiththethirdquarterof2024.OurU.S.Refiningfinancialresultsweresignifica

316、ntlyimpactedbydecliningmarketcrackspreads.TotalOperatingMarginforthequarterwas$2.3billion,comprising$2.7billionintheupstreamandanOperatingMarginshortfallof$396millioninthedownstream(thirdquarterof2024OperatingMargin$2.4billion).Upstreamproductionaveraged816.0thousandBOEperday,anincreaseof44.7thousan

317、dBOEperdayfromthethirdquarterof2024,duetothecompletionoftheChristinaLaketurnaroundinSeptemberandpositivepost-turnaroundimpacts.Downstreamthroughputincreasedfourpercentfromthethirdquarterof2024to666.7thousandbarrelsperday,largelydrivenbyimprovedreliabilityintheU.S.Refiningsegmentandthecompletionofthe

318、turnaroundattheLimaRefineryinOctober,partiallyoffsetbysomeeconomicruncutsasmarketcrackspreadsweakened.Benchmarkmarketcrackspreadsdeclinedsignificantlyinthefourthquarterof2024.TheChicago3-2-1crackspreadandtheGroup33-2-1crackspreadfell35percentand33percent,respectively,fromthethirdquarterof2024toUS$12

319、.12 and US$12.66 per barrel.Net of RINs,Chicago market crack spreads in the fourth quarter averagedUS$8.10perbarrel,comparedwithUS$14.73perbarrelinthethirdquarterof2024.WemechanicallycompletedtheNarrowsLakepipelinetoChristinaLake.Thepipelinewillcommencesteaminjectioninthespringandtheprojectremainson

320、trackforfirstoilmid-2025.We progressed the West White Rose project and mechanical completion of the topsides and concrete gravitystructureoccurredinthefourthquarter.Theprojectisontracktodeliverfirstoilin2026.Refitworkthatcommencedinthefirstquarterof2024ontheSeaRoseFPSOwascompletedandthevesselreturne

321、dtothefieldinNovember.Cashfromoperatingactivitiesfellto$2.0billionfrom$2.5billioninthethirdquarterof2024,andAdjustedFundsFlowdecreasedto$1.6billionfrom$2.0billioninthethirdquarter,primarilyduetohighercashtaxesandlowerOperatingMargin.Wereturned$438milliontocommonshareholdersthroughthebasedividendands

322、harebuybacksof$108million.FourthQuarter2024ResultsComparedwiththeFourthQuarter2023ThesummarybelowcomparesfinancialandoperatingresultsforthethreemonthsendedDecember31,2024,comparedwiththesameperiodin2023.UpstreamProductionVolumesTotalupstreamproductionincreased7.4thousandBOEperdayinthefourthquarterof

323、2024comparedwith2023,primarilydueto:Successfulresultsfromredevelopmentwellsandpositivepost-turnaroundimpactsatourChristinaLakeasset.IncreasedproductionatthefullyoperationalMACfieldthatcameonlineinSeptember2023,combinedwithhigherbuyernominationsandincreasedcondensateliftinginourIndonesiaoperations.Th

324、eincreaseswerepartiallyoffsetbylessnewwelldevelopmentandthedivestitureofnon-coreassetsinthefirstandthirdquartersof2024inourConventionalsegment.DownstreamRefiningThroughputandProductionCanadianRefiningoperationswerestronginthefourthquarterwithcrudeunitutilizationof97percent(202393percent).Throughputi

325、ncreased4.1thousandbarrelsperdayto104.4thousandbarrelsperdayandproductionincreased5.1thousandbarrelsperdayto118.4thousandbarrelsperdaycomparedwith2023.U.S.Refiningthroughputincreased83.5thousandbarrelsperdayto562.3thousandbarrelsperdayandtotalrefinedproductproductionincreased90.1thousandbarrelsperda

326、yto604.2thousandbarrelsperdaycomparedwith2023,primarilyduetolowermaintenanceactivityin2024,comparedwithaturnaroundatthenon-operatedBorgerRefineryin2023.TheincreaseswerepartiallyoffsetbytheturnaroundattheLimaRefinery,whichendedinlateOctober.WewereabletopartiallymitigatetheimpactoftheturnaroundattheLi

327、maRefinerybyprocessingintermediateproductsatourToledoRefinery,whichallowedtheLimaRefineryscrudeunittocontinueoperations.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis35CENOVUS ENERGY 2024 ANNUAL REPORT|37OperatingMarginThreeMonthsEndedDecember31,2024and2023($millions)2,3408824247(443)1,962123

328、370126(430)20242023OilSandsConventionalOffshoreCanadianRefiningU.S.Refining(1,000)1,0002,0003,000OperatingMarginwas$2.3billioninthefourthquarterof2024,comparedwith$2.2billioninthefourthquarterof2023.Theincrease was primarily due to higher Realized Sales Prices in our Oil Sands segment driven by the

329、narrower WTI-WCSdifferential.TheincreasewaspartiallyoffsetbylowerGrossMarginintheCanadianRefiningsegmentasaresultoflowerrefinedproductpricingandlowersalesvolumesinourOffshoresegment.OperatingMarginintheU.S.Refiningsegmentdecreasedduetolowermarketcrackspreadsandhigheroperatingexpenses.CashFrom(Usedin

330、)OperatingActivitiesandAdjustedFundsFlowCashfromoperatingactivitiesdecreased$917millionto$2.0billioninthefourthquarterof2024,comparedwiththefourthquarterof2023,primarilyduetochangesinnon-cashworkingcapitalandhighercashtaxes.Thenetchangeinnon-cashworkingcapitalwasasourceofcashof$492millionin2024,prim

331、arilyduetoincreasesinaccountspayableandtaxespayable,combinedwithadecreaseinaccountsreceivable,partiallyoffsetbyincreasedinventories.In2023,the$949millionsourceofcashwasprimarilyduetoloweraccountsreceivableandinventories,partiallyoffsetbyloweraccountspayable,alldrivenbydecreasingcommoditypricesduring

332、theperiod.AdjustedFundsFlowdecreasedto$1.6billioninthefourthquarterof2024,comparedwith$2.1billionin2023,primarilyduetohighercashtaxes.NetEarnings(Loss)Netearningswere$146millioninthefourthquarterof2024comparedwith$743millioninthefourthquarterof2023.Thedecreasewasprimarilyduetoforeignexchangelossesof

333、$381millionin2024comparedwithgainsof$74millionandhighergeneralandadministrativeexpenses,mainlydrivenbyhigherpeoplecostscomparedwith2023.CapitalInvestmentCapitalinvestmentincreasedto$1.5billioninthefourthquarterof2024,comparedwith$1.2billioninthefourthquarterof2023,aswecontinuedourupstreamgrowthprojectsanddownstreamsustainingwork.CenovusEnergyInc.2024ManagementsDiscussionandAnalysis3638|CENOVUS ENE