EX-99.3 4 q22023interimconsolidatedf.htm EX-99.3 Document
            
Exhibit 99.3

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Cenovus Energy Inc.
Interim Consolidated Financial Statements (unaudited)
For the Periods Ended June 30, 2023
(Canadian Dollars)











CONSOLIDATED FINANCIAL STATEMENTS (unaudited) logo2a.gif
For the periods ended June 30, 2023

TABLE OF CONTENTS

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
2



CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (unaudited)
For the periods ended June 30,
($ millions, except per share amounts)
Three Months Ended
Six Months Ended
Notes2023
2022
2023
2022
Revenues1
Gross Sales12,86820,74725,72638,130
Less: Royalties6371,5821,2332,767
12,23119,16524,49335,363
Expenses1
Purchased Product5,7099,39411,50116,878
Transportation and Blending2,6413,0505,4946,023
Operating1,5411,4813,0932,768
(Gain) Loss on Risk Management2323283171,568
Depreciation, Depletion and Amortization
10,11
1,0721,1322,1772,162
Exploration Expense410826
(Income) Loss From Equity-Accounted Affiliates12(6)2(12)(2)
General and Administrative167218325417
Finance Costs5193195387424
Interest Income(34)(8)(67)(23)
Integration and Transaction Costs417283752
Foreign Exchange (Gain) Loss, Net6(119)192(126)90
Revaluation (Gain) Loss433
Re-measurement of Contingent Payments16(1)1516251
(Gain) Loss on Divestiture of Assets(10)(62)(11)(304)
Other (Income) Loss, Net(14)(38)(20)(408)
Earnings (Loss) Before Income Tax1,0483,2731,6415,441
Income Tax Expense (Recovery)71828411391,384
Net Earnings (Loss)8662,4321,5024,057
Net Earnings (Loss) Per Common Share ($)
8
Basic0.451.230.782.04
Diluted0.441.190.761.98
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)
For the periods ended June 30,
($ millions)
Three Months EndedSix Months Ended
Notes2023202220232022
Net Earnings (Loss)8662,4321,5024,057
Other Comprehensive Income (Loss), Net of Tax20
Items That Will not be Reclassified to Profit or Loss:
Actuarial Gain (Loss) Relating to Pension and Other Post-
   Employment Benefits
(1)27(4)57
Change in the Fair Value of Equity Instruments at FVOCI (1)
(1)(1)
Items That may be Reclassified to Profit or Loss:
Foreign Currency Translation Adjustment(265)322(284)172
Total Other Comprehensive Income (Loss), Net of Tax(267)349(289)229
Comprehensive Income (Loss)5992,7811,2134,286
(1)Fair value through other comprehensive income (loss) (“FVOCI”).

See accompanying Notes to the interim Consolidated Financial Statements (unaudited).


Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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CONSOLIDATED BALANCE SHEETS (unaudited)
As at
($ millions)
Notes
June 30,
2023
December 31, 2022
Assets
Current Assets
Cash and Cash Equivalents2,1674,524
Accounts Receivable and Accrued Revenues3,2413,473
Income Tax Receivable290121
Inventories4,2524,312
Total Current Assets9,95012,430
Restricted Cash17202209
Exploration and Evaluation Assets, Net
1,9
765685
Property, Plant and Equipment, Net
1,10
36,69836,499
Right-of-Use Assets, Net
1,11
1,7811,845
Income Tax Receivable2525
Investments in Equity-Accounted Affiliates12358365
Other Assets13287342
Deferred Income Taxes758546
Goodwill
1
2,9232,923
Total Assets53,74755,869
Liabilities and Equity
Current Liabilities
Accounts Payable and Accrued Liabilities6,0406,124
Income Tax Payable481,211
Short-Term Borrowings14115
Lease Liabilities15274308
Contingent Payments16262263
Total Current Liabilities6,6248,021
Long-Term Debt148,5348,691
Lease Liabilities152,5002,528
Contingent Payments1658156
Decommissioning Liabilities173,6053,559
Other Liabilities181,0441,042
Deferred Income Taxes4,0904,283
Total Liabilities26,45528,280
Shareholders’ Equity27,27927,576
Non-Controlling Interest1313
Total Liabilities and Equity53,74755,869
Commitments and Contingencies26
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF EQUITY (unaudited)
($ millions)
Shareholders’ Equity
Common SharesPreferred SharesWarrants
Paid in
Surplus
Retained
Earnings
AOCI (1)
TotalNon-Controlling Interest
(Note 19)
(Note 19)
(Note 19)
(Note 20)
As at December 31, 2021
17,0165192154,28487868423,59612
Net Earnings (Loss)4,0574,057
Other Comprehensive Income
  (Loss), Net of Tax
229229
Total Comprehensive Income (Loss)4,0572294,286
Common Shares Issued Under
   Stock Option Plans
149(29)120
Purchase of Common Shares Under
   NCIBs (2)
(577)(907)(1,484)
Warrants Exercised65(21)44
Stock-Based Compensation
   Expense
66
Base Dividends on Common Shares(276)(276)
Dividends on Preferred Shares(17)(17)
As at June 30, 2022
16,6535191943,3544,64291326,27512
As at December 31, 2022
16,3205191842,6916,3921,47027,57613
Net Earnings (Loss)1,5021,502
Other Comprehensive Income
   (Loss), Net of Tax
(289)(289)
Total Comprehensive Income (Loss)1,502(289)1,213
Common Shares Issued Under
   Stock Option Plans
23(5)18
Purchase of Common Shares Under
   NCIBs (2)
(133)(217)(350)
Warrants Exercised16(5)11
Warrants Purchased and Cancelled(151)(562)(713)
Stock-Based Compensation
   Expense
77
Base Dividends on Common Shares(465)(465)
Dividends on Preferred Shares(18)(18)
As at June 30, 2023
16,226519282,4766,8491,18127,27913
(1)Accumulated other comprehensive income (loss) (“AOCI”).
(2)Normal course issuer bids (“NCIBs”).
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the periods ended June 30,
($ millions)
Three Months Ended
Six Months Ended
Notes2023202220232022
Operating Activities
Net Earnings (Loss)8662,4321,5024,057
Depreciation, Depletion and Amortization
10,11
1,0721,1322,1772,162
Deferred Income Tax Expense (Recovery)7(44)(61)(414)57
Unrealized (Gain) Loss on Risk Management2346(381)16(70)
Unrealized Foreign Exchange (Gain) Loss6(172)260(158)121
Realized Foreign Exchange (Gain) Loss on Non-Operating Items26
Revaluation (Gain) Loss433
Re-measurement of Contingent Payments, Net of Cash Paid(1)(279)16(203)
(Gain) Loss on Divestiture of Assets(10)(62)(11)(304)
Unwinding of Discount on Decommissioning Liabilities17554511089
(Income) Loss From Equity-Accounted Affiliates12(6)2(12)(2)
Distributions Received From Equity-Accounted Affiliates1271249441
Other22(14)(59)(293)
Settlement of Decommissioning Liabilities17(41)(27)(89)(46)
Net Change in Non-Cash Working Capital25132(92)(1,501)(1,291)
Cash From (Used in) Operating Activities1,9902,9791,7044,344
Investing Activities
Acquisitions, Net of Cash Acquired4(4)(1)(469)(1)
Capital Investment 1(1,002)(822)(2,103)(1,568)
Proceeds From Divestitures3112111,062
Payment on Divestiture of Assets(50)(50)
Net Change in Investments and Other(80)(110)(93)(236)
Net Change in Non-Cash Working Capital25(76)80(260)339
Cash From (Used in) Investing Activities(1,159)(791)(2,914)(454)
Net Cash Provided (Used) Before Financing Activities8312,188(1,210)3,890
Financing Activities25
Net Issuance (Repayment) of Short-Term Borrowings(63)(115)(79)
(Repayment) of Long-Term Debt(750)(1,260)
Principal Repayment of Leases15(76)(75)(146)(150)
Common Shares Issued Under Stock Option Plans147618120
Purchase of Common Shares Under NCIBs19(310)(1,018)(350)(1,484)
Proceeds From Exercise of Warrants8341144
Base Dividends Paid on Common Shares8(265)(207)(465)(276)
Dividends Paid on Preferred Shares8(9)(8)(27)(17)
Other(1)(2)
Cash From (Used in) Financing Activities(639)(2,011)(1,074)(3,104)
Effect of Foreign Exchange on Cash and Cash Equivalents
(74)117(73)34
Increase (Decrease) in Cash and Cash Equivalents118294(2,357)820
Cash and Cash Equivalents, Beginning of Period2,0493,3994,5242,873
Cash and Cash Equivalents, End of Period2,1673,6932,1673,693
See accompanying Notes to the interim Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES
Cenovus Energy Inc., including its subsidiaries, (together “Cenovus” or the “Company”) is an integrated energy company with crude oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States (“U.S.”).
Cenovus is incorporated under the Canada Business Corporations Act and its common shares and common share purchase warrants are listed on the Toronto Stock Exchange (“TSX”) and the New York Stock Exchange. Cenovus’s cumulative redeemable preferred shares series 1, 2, 3, 5 and 7 are listed on the TSX. The executive and registered office is located at 4100, 225 6 Avenue S.W., Calgary, Alberta, Canada, T2P 1N2. Information on the Company’s basis of preparation for these interim Consolidated Financial Statements is found in Note 2.
Management has determined the operating segments based on information regularly reviewed for the purposes of decision making, allocating resources and assessing operational performance by Cenovus’s chief operating decision maker. The Company’s operating segments are aggregated based on their geographic locations, the nature of the businesses or a combination of these factors. The Company evaluates the financial performance of its operating segments primarily based on operating margin.
The Company operates through the following reportable segments:
Upstream Segments
Oil Sands, includes the development and production of bitumen and heavy oil in northern Alberta and Saskatchewan. Cenovus’s oil sands assets include Foster Creek, Christina Lake, Sunrise, Lloydminster thermal and Lloydminster conventional heavy oil assets. Cenovus jointly owns and operates pipeline gathering systems and terminals through the equity-accounted investment in Husky Midstream Limited Partnership (“HMLP”). The sale and transportation of Cenovus’s production and third-party commodity trading volumes are managed and marketed through access to capacity on third-party pipelines and storage facilities in both Canada and the U.S. to optimize product mix, delivery points, transportation commitments and customer diversification.
Conventional, includes assets rich in natural gas liquids (“NGLs”) and natural gas within the Elmworth-Wapiti, Kaybob‑Edson, Clearwater and Rainbow Lake operating areas in Alberta and British Columbia and interests in numerous natural gas processing facilities. Cenovus’s NGLs and natural gas production is marketed and transported, with additional third-party commodity trading volumes, through access to capacity on third-party pipelines, export terminals and storage facilities. These provide flexibility for market access to optimize product mix, delivery points, transportation commitments and customer diversification.
Offshore, includes offshore operations, exploration and development activities in China and the east coast of Canada, as well as the equity-accounted investment in the Husky-CNOOC Madura Ltd. (“HCML”) joint venture in Indonesia.
Downstream Segments
Canadian Manufacturing, includes the owned and operated Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt and other ancillary products. Cenovus also owns and operates the Bruderheim crude-by-rail terminal and two ethanol plants. The Company’s commercial fuels business across Canada is included in this segment. Cenovus markets its production and third-party commodity trading volumes in an effort to use its integrated network of assets to maximize value.
U.S. Manufacturing, includes the refining of crude oil to produce gasoline, diesel, jet fuel, asphalt and other products at the wholly-owned Lima, Superior and Toledo refineries, and the jointly-owned Wood River and Borger refineries (jointly owned with operator Phillips 66). Cenovus also markets some of its own and third-party volumes of refined petroleum products including gasoline, diesel, jet fuel and asphalt.
Corporate and Eliminations
Corporate and Eliminations, includes Cenovus-wide costs for general and administrative, financing activities, gains and losses on risk management for corporate related derivative instruments and foreign exchange. Eliminations include adjustments for internal usage of natural gas production between segments, transloading services provided to the Oil Sands segment by the Company’s crude-by-rail terminal, crude oil production used as feedstock by the Canadian Manufacturing and U.S. Manufacturing segments, the sale of condensate extracted from blended crude oil production in the Canadian Manufacturing segment and sold to the Oil Sands segment, and unrealized profits in inventory. Eliminations are recorded based on current market prices.





Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
In December 2022, Management elected to aggregate the commercial fuels business and the historical retail fuels business with the Canadian Manufacturing segment. The marketing operations of the Canadian Manufacturing segment have similar products and services, customer types, distribution methods and operate in the same regulatory environment as the commercial fuels business. Prior period results have been re-presented; see Note 3.
The following tabular financial information presents segmented information first by segment, then by product and geographic location.
A) Results of Operations – Segment and Operational Information
i) Results for the Three Months Ended June 30
Upstream
For the three months ended
Oil SandsConventionalOffshoreTotal
June 30,2023
2022
2023
2022
202320222023
2022
Revenues
Gross Sales6,55610,0486151,0792285587,39911,685
Less: Royalties
6201,4914891326371,582
5,9368,5576119902155566,76210,103
Expenses
Purchased Product
5331,0713523908851,461
Transportation and Blending
2,7003,2004634442,7503,238
Operating
67680614412863768831,010
Realized (Gain) Loss on Risk
   Management
(9)559(4)4(13)563
Operating Margin2,0362,921734341484762,2573,831
Unrealized (Gain) Loss on Risk
   Management
31(323)(1)(1)30(324)
Depreciation, Depletion and
   Amortization
730690879991159908948
Exploration Expense2(1)1210410
(Income) Loss From Equity-
   Accounted Affiliates
68(12)(6)(6)2
Segment Income (Loss)1,2672,547(13)335673131,3213,195

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
Downstream
For the three months ended
Canadian ManufacturingU.S. ManufacturingTotal
June 30,
2023
2022
202320222023
2022
Revenues
Gross Sales1,3632,2456,1988,4747,56110,719
Less: Royalties
1,3632,2456,1988,4747,56110,719
Expenses
Purchased Product
1,0831,9805,4986,9396,5818,919
Transportation and Blending
Operating
164211679655843866
Realized (Gain) Loss on Risk Management(6)87(6)87
Operating Margin1165427793143847
Unrealized (Gain) Loss on Risk Management
(5)(41)(5)(41)
Depreciation, Depletion and Amortization437210283145155
Exploration Expense
(Income) Loss From Equity-Accounted Affiliates
Segment Income (Loss)73(18)(70)7513733
For the three months ended
Corporate and EliminationsConsolidated
June 30,
2023
2022
2023
2022
Revenues
Gross Sales(2,092)(1,657)12,86820,747
Less: Royalties
6371,582
(2,092)(1,657)12,23119,165
Expenses
Purchased Product
(1,757)(986)5,7099,394
Transportation and Blending
(109)(188)2,6413,050
Operating
(185)(395)1,5411,481
Realized (Gain) Loss on Risk Management(4)14(23)664
Unrealized (Gain) Loss on Risk Management
21(16)46(381)
Depreciation, Depletion and Amortization19291,0721,132
Exploration Expense410
(Income) Loss From Equity-Accounted Affiliates(6)2
Segment Income (Loss)(77)(115)1,2473,813
General and Administrative167218167218
Finance Costs193195193195
Interest Income(34)(8)(34)(8)
Integration and Transaction Costs17281728
Foreign Exchange (Gain) Loss, Net(119)192(119)192
Revaluation (Gain) Loss
Re-measurement of Contingent Payments(1)15(1)15
(Gain) Loss on Divestiture of Assets(10)(62)(10)(62)
Other (Income) Loss, Net(14)(38)(14)(38)
199540199540
Earnings (Loss) Before Income Tax1,0483,273
Income Tax Expense (Recovery)182841
Net Earnings (Loss)8662,432

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
ii) Results for the Six Months Ended June 30
Upstream
Oil SandsConventionalOffshoreTotal
For the six months ended June 30,
2023
2022
20232022202320222023
2022
Revenues
Gross Sales12,46719,2661,6462,1917011,12514,81422,582
Less: Royalties
1,1362,5735816039341,2332,767
11,33116,6931,5882,0316621,09113,58119,815
Expenses
Purchased Product
1,0922,2838629961,9543,279
Transportation and Blending
5,6416,3569468985,7446,432
Operating
1,4131,5082942622051491,9121,919
Realized (Gain) Loss on Risk
   Management
(1)1,4264831,434
Operating Margin3,1865,1203346974489343,9686,751
Unrealized (Gain) Loss on Risk
   Management
(3)(57)(21)(1)(24)(58)
Depreciation, Depletion and
   Amortization
1,4451,3251821792193091,8461,813
Exploration Expense41425826
(Income) Loss From Equity-
   Accounted Affiliates
68(18)(10)(12)(2)
Segment Income (Loss)1,7343,8441735182436102,1504,972


Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
Downstream
Canadian Manufacturing U.S. ManufacturingTotal
For the six months ended June 30,
2023
2022
2023
2022
2023
2022
Revenues
Gross Sales2,8713,85212,05814,98314,92918,835
Less: Royalties
2,8713,85212,05814,98314,92918,835
Expenses
Purchased Product
2,1763,31510,62712,42112,80315,736
Transportation and Blending
Operating
3163621,2811,1491,5971,511
Realized (Gain) Loss on Risk Management(5)197(5)197
Operating Margin3791751551,2165341,391
Unrealized (Gain) Loss on Risk Management
(11)(14)(11)(14)
Depreciation, Depletion and Amortization86122205168291290
Exploration Expense
(Income) Loss From Equity-Accounted Affiliates
Segment Income (Loss)29353(39)1,0622541,115

Corporate and EliminationsConsolidated
For the six months ended June 30,
2023
2022
2023
2022
Revenues
Gross Sales(4,017)(3,287)25,72638,130
Less: Royalties
1,2332,767
(4,017)(3,287)24,49335,363
Expenses
Purchased Product
(3,256)(2,137)11,50116,878
Transportation and Blending
(250)(409)5,4946,023
Operating
(416)(662)3,0932,768
Realized (Gain) Loss on Risk Management3711,638
Unrealized (Gain) Loss on Risk Management
51216(70)
Depreciation, Depletion and Amortization40592,1772,162
Exploration Expense826
(Income) Loss From Equity-Accounted Affiliates(12)(2)
Segment Income (Loss)(189)(147)2,2155,940
General and Administrative325417325417
Finance Costs387424387424
Interest Income(67)(23)(67)(23)
Integration and Transaction Costs37523752
Foreign Exchange (Gain) Loss, Net(126)90(126)90
Revaluation (Gain) Loss3333
Re-measurement of Contingent Payments1625116251
(Gain) Loss on Divestiture of Assets(11)(304)(11)(304)
Other (Income) Loss, Net(20)(408)(20)(408)
574499574499
Earnings (Loss) Before Income Tax1,6415,441
Income Tax Expense (Recovery)1391,384
Net Earnings (Loss)1,5024,057

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
B) Revenues by Product
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Upstream
Crude Oil (1)
5,8088,62711,25816,759
Natural Gas4968111,3591,708
NGLs (1)
3525307061,113
Other106135258235
Total Upstream6,76210,10313,58119,815
Downstream
Canadian Manufacturing
Synthetic Crude Oil4567599501,129
Diesel346524826977
Gasoline137311248539
Asphalt141150231234
Other Products and Services283501616973
U.S. Manufacturing
Gasoline2,8544,0335,5147,261
Distillates2,0292,9914,2985,151
Other Products1,3151,4502,2462,571
Total Downstream7,56110,71914,92918,835
Corporate and Eliminations(2,092)(1,657)(4,017)(3,287)
Consolidated12,23119,16524,49335,363
(1)Prior period results have been re-presented. Third-party condensate sales previously included in crude oil have been aggregated with NGLs.
C) Geographical Information
Revenues (1)
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Canada 5,9239,67311,79718,472
United States6,0979,15912,17916,185
China211333517706
Consolidated12,23119,16524,49335,363
(1)Revenues by country are classified based on where the operations are located.
Non-Current Assets (1)
June 30,
December 31,
As at
2023
2022
Canada35,25835,194
United States5,1844,824
China1,8462,064
Indonesia358365
Consolidated42,64642,447
(1)Includes exploration and evaluation (“E&E”) assets, property, plant and equipment (“PP&E”), right-of-use (“ROU”) assets, income tax receivable, investments in equity-accounted affiliates, precious metals, intangible assets and goodwill.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
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NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
D) Assets by Segment
E&E AssetsPP&EROU Assets
June 30,December 31,June 30,December 31,June 30,December 31,
As at
202320222023202220232022
Oil Sands75567424,41524,657612638
Conventional562,0442,02022
Offshore552,5942,549143152
Canadian Manufacturing
2,4482,466237252
U.S. Manufacturing4,8854,482375329
Corporate and Eliminations312325412472
Consolidated76568536,69836,4991,7811,845
GoodwillTotal Assets
June 30,December 31,June 30,December 31,
As at
2023202220232022
Oil Sands 2,9232,92331,76332,248
Conventional 2,2602,410
Offshore3,2813,339
Canadian Manufacturing
3,2273,172
U.S. Manufacturing
8,8998,324
Corporate and Eliminations
4,3176,376
Consolidated2,9232,92353,74755,869

E) Capital Expenditures (1)
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Capital Investment
Oil Sands5393761,174751
Conventional8233223121
Offshore
Asia Pacific1212
Atlantic18389283142
Total Upstream8055001,6811,016
Canadian Manufacturing34386153
U.S. Manufacturing153267347474
Total Downstream187305408527
Corporate and Eliminations10171425
1,0028222,1031,568
Acquisitions (Note 4)
Oil Sands
13
Conventional2141
U.S. Manufacturing (2)
1337
413441
Total Capital Expenditures1,0068232,4471,569
(1)Includes expenditures on PP&E, E&E assets and capitalized interest.
(2)Cenovus was deemed to have disposed of its pre-existing interest in BP-Husky Refining LLC (“Toledo”) and reacquired it at fair value as required by International Financial Reporting Standard 3, “Business Combinations” (“IFRS 3”). The acquisition capital above does not include the fair value of the pre‑existing interest in Toledo of $320 million.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
14


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
2. BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE
In these interim Consolidated Financial Statements, unless otherwise indicated, all dollars are expressed in Canadian dollars. All references to C$ or $ are to Canadian dollars and references to US$ are to U.S. dollars.
These interim Consolidated Financial Statements have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard 34, “Interim Financial Reporting”, and have been prepared following the same accounting policies and methods of computation as the annual Consolidated Financial Statements for the year ended December 31, 2022, except for income taxes. Income taxes on earnings or loss in the interim period are accrued using the income tax rate that would be applicable to the expected total annual earnings or loss.
Certain information and disclosures normally included in the notes to the annual Consolidated Financial Statements have been condensed or have been disclosed on an annual basis only. Accordingly, these interim Consolidated Financial Statements should be read in conjunction with the annual Consolidated Financial Statements for the year ended December 31, 2022, which have been prepared in accordance with IFRS as issued by the IASB.
These interim Consolidated Financial Statements were approved by the Board of Directors effective July 26, 2023.
3. ACCOUNTING POLICIES, CRITICAL ACCOUNTING JUDGMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
Accounting policies, a list of critical accounting judgments and key sources of estimation uncertainty can be found in the Company’s annual Consolidated Financial Statements for the year ended December 31, 2022.
Adjustments to Segmented Disclosures
Certain comparative information presented in the Consolidated Statements of Earnings (Loss) and segment disclosures was revised.
In September 2022, the Company completed the divestiture of the majority of the retail fuels business. In December 2022, Management elected to aggregate the remaining commercial fuels business and the historical retail fuels business into the Canadian Manufacturing segment. Comparative periods have been re-presented to reflect this change, with no impact to net earnings (loss), financial position or cash flows.
The following tables reconcile the amounts previously reported in the segmented disclosures to the corresponding revised amounts:
Three Months EndedSix Months Ended
For the periods ended June 30, 2022
Canadian Manufacturing Segment
Previously ReportedRevisionsRevised BalancePreviously ReportedRevisionsRevised Balance
Gross Sales1,521 724 2,2452,565 1,287 3,852 
Purchased Product1,296 684 1,980 2,100 1,215 3,315 
Transportation and Blending(2) — —  
Operating180 31 211 304 58 362 
Depreciation, Depletion and Amortization64 72 106 16 122 
(17)(1)(18)55 (2)53 
Three Months EndedSix Months Ended
For the periods ended June 30, 2022
Retail Segment
Previously ReportedRevisionsRevised BalancePreviously ReportedRevisionsRevised Balance
Gross Sales849 (849) 1,543 (1,543) 
Purchased Product811 (811) 1,471 (1,471) 
Operating31 (31) 58 (58) 
Depreciation, Depletion and Amortization(8) 16 (16) 
(1) (2) 

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
15


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
Three Months EndedSix Months Ended
For the periods ended June 30, 2022
Corporate and Eliminations Segment
Previously ReportedRevisionsRevised BalancePreviously ReportedRevisionsRevised Balance
Gross Sales(1,782)125 (1,657)(3,543)256 (3,287)
Purchased Product(1,111)125 (986)(2,393)256 (2,137)
(671)(671)(1,150)— (1,150)
Three Months EndedSix Months Ended
For the periods ended June 30, 2022
Consolidated
Previously ReportedRevisionsRevised BalancePreviously ReportedRevisionsRevised Balance
Purchased Product9,396 (2)9,394 16,878 — 16,878 
Transportation and Blending3,048 3,050 6,023 — 6,023 
12,44412,44422,90122,901
4. ACQUISITIONS
A) BP-Husky Refining LLC
i) Summary of the Acquisition
On February 28, 2023, Cenovus acquired the remaining 50 percent interest in Toledo from BP Products North America Inc. (“bp”), a joint operation (the “Toledo Acquisition”). The Toledo Acquisition provides Cenovus full ownership and operatorship of the refinery, and further integrates Cenovus’s heavy oil production and refining capabilities. Total consideration for the Toledo Acquisition was US$369 million (C$502 million) in cash, including working capital.
The Toledo Acquisition has been accounted for using the acquisition method pursuant to IFRS 3. Under the acquisition method, assets and liabilities are recorded at fair value on the date of acquisition and the total consideration is allocated to the assets acquired and liabilities assumed. The excess of consideration given over the fair value of the net assets acquired, if any, is recorded as goodwill.
ii) Identifiable Assets Acquired and Liabilities Assumed
The preliminary purchase price allocation is based on Management’s best estimate of fair value. Upon finalizing the fair value of net assets acquired, adjustments to initial estimates, including goodwill, may be required.
The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition.
As atFebruary 28, 2023
100 Percent of the Identifiable Assets Acquired and Liabilities Assumed
Cash69
Accounts Receivable and Accrued Revenues3
Inventories453
Property, Plant and Equipment 674
Right-of-Use Assets33
Other Assets10
Accounts Payable and Accrued Liabilities(138)
Lease Liabilities(33)
Decommissioning Liabilities (5)
Other Liabilities(70)
Total Identifiable Net Assets996
The fair value and gross contractual amount of acquired accounts receivable and accrued revenues is $3 million, all of which is expected to be collectible.


Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
16


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
iii) Goodwill
As atFebruary 28, 2023
Total Purchase Consideration502
Fair Value of Pre-Existing 50 Percent Ownership Interest in Toledo
494
Fair Value of Identifiable Net Assets(996)
Goodwill
Fair Value of Pre-Existing 50 Percent Ownership Interest in BP-Husky Refining LLC
Prior to the Toledo Acquisition, Toledo was jointly controlled with bp and met the definition of a joint operation under IFRS 11, “Joint Arrangements”; therefore, Cenovus recognized its share of the assets, liabilities, revenues and expenses in its consolidated results. Subsequent to the Toledo Acquisition, Cenovus controls Toledo, as defined under IFRS 10, “Consolidated Financial Statements”, and, accordingly Toledo has been consolidated. As required by IFRS 3, when an acquirer achieves control in stages, the previously held interest is re-measured to fair value at the acquisition date with any gain or loss recognized as a revaluation (gain) loss in the Consolidated Statements of Earnings (Loss). When a disposition includes a foreign operation, the associated cumulative amount of foreign exchange differences are reclassified to earnings as part of the revaluation (gain) loss.
The acquisition-date fair value of the previously held interest was estimated to be $494 million and the net carrying value of Toledo assets was $539 million. On February 28, 2023, Cenovus recognized a non-cash revaluation loss of $33 million ($22 million, after tax) on the re-measurement of its existing interest in Toledo to fair value, net of $12 million in associated cumulative foreign exchange differences.
iv) Integration and Transaction Costs
For the three and six months ended June 30, 2023, integration costs of $13 million and $28 million, respectively, and transaction costs of $4 million and $9 million, respectively, associated with the Toledo Acquisition were recognized in the Consolidated Statements of Earnings (Loss).
v) Revenue and Profit Contribution
The acquired business contributed revenues of $604 million and net loss of $176 million for the period from February 28, 2023, to June 30, 2023. On September 20, 2022, an incident occurred at the Toledo Refinery, resulting in the shutdown of the facility. The Toledo Refinery was fully operational in June. If the closing of the Toledo Acquisition had occurred on January 1, 2023, Cenovus’s consolidated pro forma revenues and net earnings for the six months ended June 30, 2023, would have been $24.5 billion and $1.4 billion, respectively. These amounts have been calculated using results from the acquired business, adjusting them for:
Additional DD&A that would have been charged assuming the fair value adjustments to PP&E had applied from January 1, 2023.
Additional accretion on the decommissioning liabilities if they had been assumed on January 1, 2023.
The consequential tax effects.
This pro forma information is not necessarily indicative of the results that would have been obtained if the Toledo Acquisition had actually occurred on January 1, 2023.
B) Sunrise Oil Sands Partnership
On August 31, 2022, Cenovus closed a transaction with BP Canada Energy Group ULC (“bp Canada”) to purchase the remaining 50 percent interest in Sunrise Oil Sands Partnership (“SOSP”), previously a joint operation, in northern Alberta (the “Sunrise Acquisition”). It provided Cenovus with full ownership and further enhanced Cenovus’s core strength in the oil sands.
The final purchase price allocation was based on Management’s best estimate of the assets acquired and liabilities assumed. No additional adjustments were made to the purchase price allocation in the period. For more details, see Note 5 of the annual Consolidated Financial Statements for the year ended December 31, 2022.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
17


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
5. FINANCE COSTS
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Interest Expense – Short-Term Borrowings and Long-Term Debt95130191260
Net Premium (Discount) on Redemption of Long-Term Debt (1)
(32)(25)
Interest Expense – Lease Liabilities (Note 15)
40418083
Unwinding of Discount on Decommissioning Liabilities (Note 17)
554511089
Other7121318
197196394425
Capitalized Interest(4)(1)(7)(1)
193195387424
(1)Includes the premium or discount on redemption, net of transaction costs and the amortization of associated fair value adjustments.
6. FOREIGN EXCHANGE (GAIN) LOSS, NET
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Unrealized Foreign Exchange (Gain) Loss on Translation of:
U.S. Dollar Debt Issued From Canada(142)273(147)120
Other(30)(13)(11)1
Unrealized Foreign Exchange (Gain) Loss(172)260(158)121
Realized Foreign Exchange (Gain) Loss53(68)32(31)
(119)192(126)90
7. INCOME TAXES
The provision for income taxes is:
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Current Tax
Canada199570457937
United States(17)261281
Asia Pacific387184109
Other International612
Total Current Tax Expense (Recovery)2269025531,327
Deferred Tax Expense (Recovery)(44)(61)(414)57
1828411391,384
For the six months ended June 30, 2023, Cenovus recorded a current tax expense in all jurisdictions in which the Company operates, other than the U.S. The decrease from the prior year is due to lower earnings in the first six months of 2023. For the six months ended June 30, 2023, Cenovus incurred a deferred tax recovery of $414 million of which $176 million related to a step-up in the tax basis on the Toledo Acquisition on February 28, 2023.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
18


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
8. PER SHARE AMOUNTS
A) Net Earnings (Loss) Per Common Share – Basic and Diluted
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Net Earnings (Loss)8662,4321,5024,057
Effect of Cumulative Dividends on Preferred Shares(9)(8)(18)(17)
Net Earnings (Loss) – Basic and Diluted8572,4241,4844,040
Basic – Weighted Average Number of Shares1,9031,9711,9061,981
Dilutive Effect of Warrants33473746
Dilutive Effect of Net Settlement Rights611712
Dilutive Effect of Cenovus Replacement Stock Options (1)
11
Diluted – Weighted Average Number of Shares1,9432,0291,9512,039
Net Earnings (Loss) Per Common Share – Basic ($)
0.451.230.782.04
Net Earnings (Loss) Per Common Share – Diluted (1) (2) ($)
0.441.190.761.98
(1)For the three and six months ended June 30, 2023, the dilutive effect of Cenovus replacement stock options was 1 million common shares. For the three and six months ended June 30, 2022, net earnings of $24 million and $41 million, respectively, and common shares of 2 million and 2 million, respectively, related to the assumed exercise of the Cenovus replacement stock options were excluded from the calculation of dilutive net earnings (loss) per share as the impact was anti-dilutive.
(2)For the three and six months ended June 30, 2023, net settlement rights (“NSRs”) of 2 million (three and six months ended June 30, 2022 – nil and 2 million, respectively) were excluded from the calculation of diluted weighted average number of shares as the effect would have been anti-dilutive or the exercise prices exceeded the market price of Cenovus’s common shares.
B) Common Share Dividends
20232022
For the six months ended June 30,
Per ShareAmountPer ShareAmount
Base Dividends 0.2454650.140276
Variable Dividends
Total Common Share Dividends Declared and Paid0.2454650.140276
The declaration of common share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.
On July 26, 2023, the Company’s Board of Directors declared a third quarter base dividend of $0.140 per common share, payable on September 29, 2023, to common shareholders of record as at September 15, 2023.
C) Preferred Share Dividends
Three Months EndedSix Months Ended
For the periods ended June 30,
2023202220232022
Series 1 First Preferred Shares1234
Series 2 First Preferred Shares11
Series 3 First Preferred Shares3366
Series 5 First Preferred Shares3254
Series 7 First Preferred Shares1133
Total Preferred Share Dividends Declared981817
The declaration of preferred share dividends is at the sole discretion of the Company’s Board of Directors and is considered quarterly.
In the three and six months ended June 30, 2023, the Company paid $9 million and $27 million, respectively, in preferred share dividends (three and six months ended June 30, 2022 — $8 million and $17 million, respectively).
On July 26, 2023, the Company’s Board of Directors declared third quarter dividends of $9 million payable on October 3, 2023, to preferred shareholders of record as at September 15, 2023.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
19


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
9. EXPLORATION AND EVALUATION ASSETS, NET
Total
As at December 31, 2022
685
Additions81
Exchange Rate Movements and Other
(1)
As at June 30, 2023
765
10. PROPERTY, PLANT AND EQUIPMENT, NET
Crude Oil and Natural Gas PropertiesProcessing, Transportation and Storage AssetsManufacturing Assets
Other Assets (1)
Total
COST
As at December 31, 2022
43,52825412,1321,82557,739
Acquisitions (Note 4) (2)
7674681
Additions 1,60017391142,022
Change in Decommissioning Liabilities38341
Divestitures (Note 4) (2)
(17)(633)(1)(651)
Exchange Rate Movements and Other(57)5(247)(8)(307)
As at June 30, 2023
45,09927612,3201,83059,525
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
As at December 31, 2022
14,3021065,5471,28521,240
Depreciation, Depletion and Amortization1,7585241292,033
Divestitures (Note 4) (2)
(8)(299)(307)
Exchange Rate Movements and Other(6)5(131)(7)(139)
As at June 30, 2023
16,0461165,3581,30722,827
CARRYING VALUE
As at December 31, 2022
29,2261486,58554036,499
As at June 30, 2023
29,0531606,96252336,698
(1)Includes assets within the commercial fuels business, office furniture, fixtures, leasehold improvements, information technology and aircraft.
(2)In connection with the Toledo Acquisition, Cenovus was deemed to have disposed of its pre-existing interest and reacquired it at fair value as required by IFRS 3. As at February 28, 2023, the carrying value of the pre-existing interest in Toledo’s PP&E was $334 million.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
20


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
11. RIGHT-OF-USE ASSETS, NET
Real Estate
Transportation and Storage Assets (1)
Manufacturing Assets
 
Other Assets (2)
Total
COST
As at December 31, 2022
5991,840174742,687
Acquisitions (Note 4) (3)
124833
Additions12526
Modifications(1)311132
Re-measurements819
Divestitures (Note 4) (3)
(19)(19)
Terminations(2)(3)(2)(7)
Exchange Rate Movements and Other(4)(9)(3)(5)(21)
As at June 30, 2023
5941,916161692,740
ACCUMULATED DEPRECIATION
As at December 31, 2022
1276455812842
Depreciation18108117144
Divestitures (Note 4) (3)
(12)(12)
Terminations(1)(2)(1)(4)
Exchange Rate Movements and Other(2)(5)(3)(1)(11)
As at June 30, 2023
1427465417959
CARRYING VALUE
As at December 31, 2022
4721,195116621,845
As at June 30, 2023
4521,170107521,781
(1)Transportation and storage assets include railcars, barges, vessels, pipelines, caverns and storage tanks.
(2)Includes assets in the commercial fuels business, fleet vehicles and other equipment.
(3)In connection with the Toledo Acquisition, Cenovus was deemed to have disposed of its pre-existing interest and reacquired it at fair value as required by IFRS 3. As at February 28, 2023, the carrying value of the pre-existing interest in Toledo’s ROU assets was $7 million.
12. JOINT ARRANGEMENTS
A) Joint Operations
Cenovus has a number of joint operations in the Upstream segments. The Company also holds the following joint operation in the U.S. Manufacturing segment.
WRB Refining LP (“WRB”)
Cenovus holds a 50 percent interest in the Wood River and Borger refineries with Phillips 66. Phillips 66 holds the remaining 50 percent interest and is the operator of the Wood River Refinery in Illinois and the Borger Refinery in Texas.
B) Joint Ventures
Husky-CNOOC Madura Ltd.
The Company holds a 40 percent interest in the jointly controlled entity, HCML, which is engaged in the exploration for and production of NGLs and natural gas in offshore Indonesia. The Company’s share of equity investment income (loss) related to the joint venture is included in the Consolidated Statements of Earnings (Loss) in the Offshore segment.
Summarized below is the financial information for HCML accounted for using the equity method.





Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
21


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
Results of Operations
Six Months Ended
For the periods ended June 30,
20232022
Revenue283129
Expenses215127
Net Earnings (Loss)682
Balance Sheet
June 30,December 31,
As at
20232022
Current Assets (1)
279247
Non-Current Assets1,7941,926
Current Liabilities114160
Non-Current Liabilities
1,1611,293
Net Assets798720
(1)Includes cash and cash equivalents of $84 million (December 31, 2022 – $64 million).
For the six months ended June 30, 2023, the Company’s share of income from the equity-accounted affiliate was $18 million (2022 – $10 million). As at June 30, 2023, the carrying amount of the Company’s share of net assets was $358 million (December 31, 2022 – $365 million). These amounts do not equal the 40 percent joint control of the revenues, expenses and net assets of HCML due to differences in the values attributed to the investment and accounting policies between the joint venture and the Company.
For the six months ended June 30, 2023, the Company received $38 million of distributions from HCML (2022 – $19 million) and paid $24 million in contributions (2022 – $25 million).
Husky Midstream Limited Partnership
The Company jointly owns and is the operator of HMLP, which owns midstream assets, including pipeline, storage and other ancillary infrastructure assets in Alberta and Saskatchewan. The Company holds a 35 percent interest in HMLP, with Power Assets Holdings Limited holding a 49 percent interest and CK Infrastructure Holdings Limited holding a 16 percent interest in HMLP.
For the six months ended June 30, 2023, HMLP had net earnings of $84 million (2022 – $80 million). The Company’s share of (income) loss from the equity-accounted affiliate does not equal the 35 percent of the net earnings of HMLP due to the nature of the profit-sharing arrangement as set forth in the partnership agreement. The Company’s share of earnings will fluctuate depending on certain income thresholds of HMLP. For the six months ended June 30, 2023, the Company did not record its share of pre-tax loss relating to HMLP of $8 million (2022 – pre-tax loss of $6 million). The carrying value was $nil at June 30, 2023 (December 31, 2022 $nil).
As at June 30, 2023, the Company had $33 million in cumulative unrecognized losses and other comprehensive income (“OCI”), net of tax (June 30, 2022 – $17 million). The Company records its share of equity investment income related to the joint venture only in excess of the cumulated unrecognized loss and is included in the Consolidated Statements of Earnings (Loss) in the Oil Sands segment.
For the six months ended June 30, 2023, the Company received $56 million of distributions from HMLP (2022 – $22 million) and paid $62 million in contributions (2022 – $30 million). The net amount of the distributions received and contributions paid is recorded in (income) loss from equity-accounted affiliates in the Oil Sands segment.

Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
22


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
13. OTHER ASSETS
June 30,December 31,
As at
20232022
Long-Term Receivables and Prepaids
65120
Precious Metals8286
Net Investment in Finance Leases6362
Private Equity Investments (Note 23)
6355
Intangible Assets1419
287342
14. DEBT AND CAPITAL STRUCTURE
A) Short-Term Borrowings
June 30,December 31,
As at
Notes20232022
Uncommitted Demand Facilitiesi
WRB Uncommitted Demand Facilitiesii115
Total Debt Principal115
i) Uncommitted Demand Facilities
As at June 30, 2023, the Company had uncommitted demand facilities of $1.9 billion (December 31, 2022 – $1.9 billion) in place, of which $1.4 billion may be drawn for general purposes, or the full amount may be available to issue letters of credit. As at June 30, 2023, there were outstanding letters of credit aggregating to $390 million (December 31, 2022 – $490 million) and no direct borrowings.
ii) WRB Uncommitted Demand Facilities
WRB has uncommitted demand facilities of US$450 million that may be used to cover short-term working capital requirements, of which Cenovus’s proportionate share is 50 percent. As at June 30, 2023, Cenovus’s proportionate share drawn on the facilities was $nil. As at December 31, 2022, Cenovus’s proportionate share of the capacity was US$225 million and US$85 million (C$115 million) of this capacity was drawn.
B) Long-Term Debt
June 30,December 31,
As at
20232022
Committed Credit Facility (1)
U.S. Dollar Denominated Unsecured Notes (2)
6,3906,537
Canadian Dollar Unsecured Notes2,0002,000
Total Debt Principal8,3908,537
Debt Premiums (Discounts), Net, and Transaction Costs144154
Long-Term Debt8,5348,691
(1) The committed credit facility may include Bankers’ Acceptances, secured overnight financing rate loans, prime rate loans and U.S. base rate loans.
(2)Total U.S. dollar denominated unsecured notes as at June 30, 2023, was US$4.8 billion (December 31, 2022 – US$4.8 billion).
As at June 30, 2023, the Company had in place a committed credit facility that consists of a $1.8 billion tranche maturing on November 10, 2025, and a $3.7 billion tranche maturing on November 10, 2026. As at June 30, 2023, no amount was drawn on the credit facility (December 31, 2022 – $nil).
As at June 30, 2023, the Company was in compliance with all of the terms of its debt agreements. Under the terms of Cenovus’s committed credit facility, the Company is required to maintain a total debt to capitalization ratio, as defined in the agreements, not to exceed 65 percent. The Company is well below this limit.



Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
23


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
C) Capital Structure
Cenovus’s capital structure consists of shareholders’ equity plus Net Debt. Net Debt includes the Company’s short-term borrowings, and the current and long-term portions of long-term debt, net of cash and cash equivalents and short-term investments. Net Debt is used in managing the Company’s capital structure. The Company’s objectives when managing its capital structure are to maintain financial flexibility, preserve access to capital markets, ensure its ability to finance internally generated growth and to fund potential acquisitions while maintaining the ability to meet the Company’s financial obligations as they come due. To ensure financial resilience, Cenovus may, among other actions, adjust capital and operating spending, draw down on its credit facilities or repay existing debt, adjust dividends paid to shareholders, purchase the Company’s common shares or preferred shares for cancellation, issue new debt, or issue new shares.
Cenovus monitors its capital structure and financing requirements using, among other things, specified financial measures consisting of Total Debt, Net Debt to adjusted earnings before interest, taxes and DD&A (“Adjusted EBITDA”), Net Debt to Adjusted Funds Flow and Net Debt to Capitalization. These measures are used to steward Cenovus’s overall debt position as measures of Cenovus’s overall financial strength.
Cenovus targets a Net Debt to Adjusted EBITDA ratio and a Net Debt to Adjusted Funds Flow ratio of approximately 1.0 times and Net Debt at or below $4 billion over the long-term at a West Texas Intermediate (“WTI”) price of US$45.00 per barrel. These measures may fluctuate periodically outside this range due to factors such as persistently high or low commodity prices.
Net Debt to Adjusted EBITDA
June 30,December 31,
As at
20232022
Short-Term Borrowings115
Current Portion of Long-Term Debt
Long-Term Portion of Long-Term Debt8,5348,691
Total Debt8,5348,806
Less: Cash and Cash Equivalents(2,167)(4,524)
Net Debt6,3674,282
Net Earnings (Loss)3,8956,450
Add (Deduct):
Finance Costs783820
Interest Income(125)(81)
Income Tax Expense (Recovery)1,0362,281
Depreciation, Depletion and Amortization4,6944,679
Exploration and Evaluation Asset Write-downs6464
(Income) Loss From Equity-Accounted Affiliates(25)(15)
Unrealized (Gain) Loss on Risk Management(40)(126)
Foreign Exchange (Gain) Loss, Net127343
Revaluation (Gain) Loss(516)(549)
Re-measurement of Contingent Payments(73)162
(Gain) Loss on Divestiture of Assets24(269)
Other (Income) Loss, Net(144)(532)
Adjusted EBITDA (1)
9,70013,227
Net Debt to Adjusted EBITDA0.7x0.3x
(1)Calculated on a trailing twelve-month basis.







Cenovus Energy Inc. – Q2 2023 Interim Consolidated Financial Statements
24


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
All amounts in $ millions, unless otherwise indicated
For the periods ended June 30, 2023
Net Debt to Adjusted Funds Flow
June 30,December 31,
As at
20232022
Net Debt6,3674,282
Cash From (Used in) Operating Activities8,76311,403
(Add) Deduct:
Settlement of Decommissioning Liabilities(193)(150)
Net Change in Non-Cash Working Capital 365575
Adjusted Funds Flow (1)
8,59110,978