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
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