Cenovus Outlines Capital Plan for 2026, Projects 4% Upstream Growth

Cenovus Energy Inc. CVE, a Canadian integrated energy firm, has provided an update about its 2026 capital spending guidance and the expected upstream and downstream production in the upcoming year. The company expects capital investment between $5 billion and $5.3 billion in 2026, which includes $350 million of turnaround costs. The turnaround costs will be capitalized in 2026. Of this total amount, approximately $3.5-$3.6 billion will account for sustaining capital expenditures. This is intended to maintain CVE’s base production and continue its operations. Furthermore, an additional $1.2-$1.4 billion of capital will be dedicated toward growth and expansion projects.

Upstream Production Outlook

Cenovus has guided total upstream production for 2026 in the range of 945,000 to 985,000 barrels of oil equivalent per day (BOE/d). This indicates year-over-year growth of 4%, after adjusting for the production increase associated with the acquisition of MEG Energy. The highest contribution to its upstream production comes from Oil sands production, which is expected to be in the 755,000-780,000 BOE/d range for 2026. The company has also mentioned that operating costs per BOE are expected to be between $11.25 and $12.75 for the year. Additionally, total Conventional production is projected to be in the range of 120,000 -125,000 BOE/d, while operating costs for this segment have been guided between $11 and $12 per BOE.

Downstream Throughput and Refining Guidance

The company also mentioned the expected downstream crude throughput to lie in the band of 430,000-450,000 barrels per day (bbl/d). This implies a crude utilization rate of nearly 91% and 95%. The crude throughput from Canadian Refining is projected to be between 105,000 and 110,000 bbl/d, and operating costs in the segment are expected to lie between $11.50 and $12.50 per barrel. Additionally, crude throughput from U.S. Refining has been guided between 325,000 and 340,000 bbls/d, with operating costs in the range of $11-$12 per barrel.

Corporate Guidance

CVE’s corporate guidance mentioned general and administrative expenses, excluding stock-based compensation, to be in the range of $625-$675 million. These figures remain broadly flat compared to the previous year, as CVE anticipates that cost savings and synergies will offset the additional expenses incurred from the acquisition of MEG Energy. Additionally, the company expects to incur expenses of approximately $150-$200 million associated with integration, transaction and other one-off costs in 2026.

Overall, the company’s capital guidance for 2026 reflects its broader strategy of reducing growth investments compared with 2025. Cenovus’ CEO mentioned that the company’s diversified portfolio presents a strong set of opportunities that have significant potential. The company will continue developing these opportunities while also prioritizing debt reduction and returning value to shareholders. It will also maintain its focus on cost control to remain competitive relative to its peers. Together, these factors highlight Cenovus’s focus on maintaining safe and reliable operations, cost competitiveness, and strengthening its outlook for the coming year.

CVE’s Zacks Rank and Key Picks

CVE currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the energy sector are Oceaneering International OII, Canadian Natural Resources Ltd. CNQ and FuelCell Energy FCEL. While Oceaneering currently sports a Zacks Rank #1 (Strong Buy), Canadian Natural Resources and FuelCell carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Oceaneering International delivers integrated technology solutions across all stages of the offshore oilfield lifecycle. The company is a leading provider of offshore equipment and technology solutions to the energy industry. OII’s proven ability to deliver innovative, integrated solutions supports ongoing client retention and new business opportunities, ensuring steady revenue growth.

Canadian Natural Resources is one of the largest independent energy companies in Canada engaged in the exploration, development and production of oil and natural gas. The company boasts a diversified portfolio of crude oil, natural gas, bitumen and synthetic crude oil. It has delivered 25 consecutive years of dividend increases, one of the longest streaks among global oil producers.

FuelCell Energy is a clean energy company offering low-carbon energy solutions. It produces power using flexible fuel sources such as biogas, natural gas and hydrogen. The company designs fuel cells that generate electricity through an electrochemical process that combines fuel with air, reducing carbon emissions and minimizing the environmental impact of power generation. As such, FCEL is anticipated to play a crucial role in the energy transition by enabling industries and communities to shift from traditional fossil fuels to low-carbon alternatives.

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