Feb 19 (Reuters) - Cenovus Energy said on Thursday it has begun drilling new wells at its Christina Lake oil sands site in northern Alberta formerly owned by MEG Energy, a plan it says will boost the company's overall production both this year and in 2027.
The Canadian oil sands producer, which surpassed market estimates for fourth-quarter adjusted profit on Thursday, acquired smaller MEG Energy last year after a bitter takeover fight with rival Strathcona Resources.
The acquisition immediately added approximately 100,000 bpd of production to the Cenovus portfolio, cementing its position as one of the largest heavy oil producers in the world. Production by Cenovus was 917,900 barrels of oil equivalent per day in the fourth quarter, up from 816,000 boepd a year earlier, in large part due to the addition of the former MEG site at Christina Lake.
Cenovus has stated it can grow the Christina Lake facility's production beyond what MEG had achieved from the location. The company has now begun drilling 42 new wells as part of a redevelopment plan at the site, CEO Jon McKenzie said on a conference call on Thursday, adding it will impose Cenovus well-design technologies at the previous MEG site.
The company also has a processing facility expansion plan in the works for Christina Lake, which will take the former MEG site's production to an excess of 150,000 bpd by 2027 or 2028, McKenzie said.
Canadian oil sands producers, including Cenovus, have remained resilient amid a global oil industry downturn, supported by years of investment that have made them among North America's lowest-cost producers.
The Calgary, Alberta-based company posted an adjusted profit of 50 Canadian cents per share for the three months ended December 31, compared with analysts' average estimate of 39 Canadian cents per share, according to data compiled by LSEG.
The country's oil producers are also gaining from the expanded Trans Mountain pipeline, which opens access to global markets and lessens their dependence on the U.S. pipeline system.
McKenzie said on Thursday Cenovus is closely watching plans by Trans Mountain and rival Enbridge to incrementally expand their existing pipeline systems to meet rising output from Canada, and will likely pursue long-term contracts on any new export capacity that materializes.
"We are actively evaluating and looking at all of those options that are available to us, and you shouldn't be surprised if we take action on some of those," McKenzie said.
($1 = 1.3684 Canadian dollars)
(Reporting by Amanda Stephenson in Calgary and Katha Kalia in Bengaluru; Editing by Leroy Leo and Will Dunham)
By Amanda Stephenson and Katha Kalia
