By Robb M. Stewart

Cenovus Energy bumped up its dividend despite the heightened uncertainty caused by the Trump administration's tariffs and a drop in earnings in the first three months of the year.

The Canadian oil and natural gas company said the increased payout is part of its commitment to return excess cash to its shareholders and is underpinned by resilience at anticipated oil prices and a push to complete several big growth projects.

Cenovus recorded quarterly net earnings of 859 million Canadian dollars ($620.6 million), or C$0.47 a share, against C$1.18 billion, or C$0.62, a year earlier. The decline was largely due to a lower operating margin and a rise in depreciation, depletion and amortization expenses, as well as comparison with a gain the year before on the sale of assets.

Revenue rose to C$13.3 billion in the January-to-March period from C$13.06 billion last year, lifted by a 17% increase in upstream revenue due to increased production volumes and a narrowing in the spread between Canadian and U.S. benchmark oil prices. That offset a roughly 6% fall in downstream revenue due to lower refined product pricing.

The company's production, which comes from a mix of oil and gas production from oil sands, conventional and offshore operations, averaged 818,900 barrels of oil equivalent a day, up from 800,000 barrels a year earlier, but just below the 819,300 a day expected by analysts polled by FactSet.

Cenovus's board approved an 11% increase in the company's base dividend to C$0.80 a share annually, beginning in the second quarter. That equates to a quarterly dividend of C$0.20 a share, payable June 30 to shareholders of record as of June 13.

President and Chief Executive Jon McKenzie said the company made significant progress on its driving growth projects toward completion in the quarter, and cost controls and financial discipline position Cenovus to navigate market volatility.

Cenovus in a letter to shareholders said the record U.S. tariff announcements, pauses, delays and modifications had introduced significant uncertainty in the market and raised the possibility of a global recession. It expects heightened price volatility across all commodities to continue until there is more certainty on duration and magnitude of the tariffs.

Crude oil prices fell in the first three months of 2025, in part on expectations of reduced demand with a slowdown in economies around the world. Most of Cenovus's crude and refinery production is exposed to movements in benchmark oil prices, and its refining capacity is focused on the supply the U.S. Midwest.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

May 08, 2025 07:23 ET (11:23 GMT)

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