Kam Sandhar - Vice President Investor Relations and Corporate Development Brian Ferguson - President and Chief Executive Officer Drew Zieglgansberger - Executive Vice President, Oil Sands Manufacturing Kieron McFadyen - Executive Vice President and President, Upstream Oil & Gas Bob Pease - Executive Vice President, Corporate Strategy and President, Downstream.

Phil Gresh - JP Morgan Paul Cheng - Barclays Neil Mehta - Goldman Sachs.

Good day, ladies and gentlemen and thank you for standing by. Welcome to Cenovus Energy’s Third Quarter 2016 Financial and Operating Results. As a reminder, today’s call is being recorded. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions].

Members of the investment community will have the opportunity to ask questions first. At the conclusion of that session, members of the media may then ask questions. Please be advised that this conference call may not be recorded or rebroadcast without the express consent of Cenovus Energy. I’d now like to turn the conference call over to Mr.

Kam Sandhar, Vice President Investor Relations and Corporate Development. Please go ahead, Mr. Sandhar..

Thank you, operator, and welcome everyone to our third quarter 2016 results conference call. I would like to refer to you to the advisories located at the end of today’s news release.

These advisories describe the forward-looking information; non-GAAP measures; and oil and gas terms referred to today and outline the Risk Factors and assumptions relevant to this discussion. Additional information is available in our most recent annual information form or Form 40-F.

The quarterly results have been presented in Canadian dollars and on a before-royalties basis. We have also posted a link to our quarterly results including updated guidance on the home page of our website at cenovus.com.

Brian Ferguson, our President and Chief Executive Officer will provide brief comments and will then turn to the Q&A portion of the call with Cenovus’s leadership team. Please go ahead, Brian..

Thanks Kam. Good morning. Our third quarter results continue to demonstrate our focus on safe and reliable operations, improving our cost structure, capital discipline and financial strength. These factors combined put us in a very good position to create value as we assess our 2017 budget.

Our upstream business continues to perform well as discussed last quarter the Foster Creek Phase G expansion came online this summer. This new phase ramp up is on-track and performing well. Full year creek production is on track to achieve guidance for the year with recent production exceeding 75,000 barrels per day net to Cenovus.

Recent steam to oil ratio performance is tracking towards the low end of the 2016 guidance range. At Christina Lake our operations and SOR continue to be industry leading. Operations ran near name plate design of 80,000 barrels per day net through the first three quarters of 2016 with an SOR of 1.9.

Our newest expansion Christina Lake Phase F begins steam circulation of new pads late this summer and production is expected next month. Incremental production is expected to ramp up to the 25,000 barrel per day of net capacity over the next 12 months. We also expect our 100 MW Cogen Plant to be online shortly.

That will be providing a secure power source for all of our current and our future operations at Christina Lake. With regards to the next 50,000 barrel a day expansion at Christina Lake, we continue engineering work and finalizing our cost estimates and updating our construction execution plans.

Phase G will benefit from the pre build associated with Phase F and the current deflationary environment. Our continued focus on sustainable cost reductions as well as additional details regarding the Federal Government’s proposed national carbon framework will allow us to make more informed decisions on 2017 growth capital.

I believe investing counter cyclically without compromising our financial strength will help generate value for our shareholders. Cost structure continues to be a prime focus for Cenovus. Year-to-date our total oil sands operating cost of about $8.75 per barrel. That’s down 35% from our 2014 average.

Non fuel oil sands operating cost are down approximately 30% over the same period. As we discussed in our news release we have already achieved our 2016 cost reduction target of $500 million as compared to our original 2016 budget. We will continue to look for sustainable cost improvements going forward.

Given the scale of our oil sands operation we now have in place, sustaining capital even more important for us as it will be a significant portion of our future capital.

One of the things we are working on to reduce sustaining capital are redesigned well pads, the first of which is currently being constructed at Christina Lake and is expected to be in operation next year.

All new well pads will be based on this new template and are expected to achieve 35% to 50% facility class savings per well pad module compared to where we were at in 2014. In addition, we have improved well board conformance which has allowed us to drill longer horizontal well pairs and reduce the number of wedge wells.

These are just two examples of initiatives that are driving sustaining capital cost lower. Our conventional oil and gas operations also performed very well in the quarter, generating approximately $110 million in free cash flow during the quarter.

In our downstream the Wood River and Borger Refineries had strong operating performance resulting in high utilization rates in the third quarter. Wood River debottleneck project was completed as planned in the third quarter due to lower market caps. Cracks during the quarter refining gas flow was down from the second quarter.

Our financial strength continues to be a prime focus for us. We have just under $4 billion in cash on our balance sheet and another $4 billion in unused credit facilities. We remained well positioned to stand this volatile commodity price environment while selectively investing in our top tier oil sands assets. We have begun our 2017 budgeting process.

I will be able to share more details about our plans for the year ahead when we release the 2017 budget which will be on December 8. We intend to keep the capital discipline top of mind as we finalize the 2017 budget. Oil sands continues to be a top priority for our capital.

We have been clear about our capital priorities within the oil sands and that Christina Lake Phase G will be the first project in the oil sands to resume construction. I believe that a more modest pace of expansion in this uncertain oil price environment to help maintain our financial strength.

You should expect that this will be reflected in our 2017 budget. With those remarks the Cenovus leadership team and I are now ready to respond to your questions. .

[Operator Instructions] We will now begin the question and answer session and go to the first caller. Your first question is from Phil Gresh from JP Morgan. .

Hey good morning. First question, I know I have this last quarter with but I will try again.

Just generally thinking about your return of capital priorities, where the dividend stands today and basically if you were to use a strip pricing scenario, how do you think about the ability to raise the dividend over time and/or includes some buybacks in the mix?.

Well thanks for that question again Phil. Our prime focus here as we go forward is ensuring that we maintain the financial strength and the financial resilience we have got on the balance sheet.

We need roughly $1 billion in capital to sustain our existing operations and existing production base that we have today and that covers all of our upstream, downstream and any corporate cost in that number.

Beyond that certainly the existing level of the dividend is very sustainable, I think I have mentioned before, in that $45 to $50 range we cover all of our capital expenditures plus the dividend and we begin to generate free cash flow above that level. Dividend is very important to us.

It is an important part obviously total shareholder return and that sustainability of that dividend is important and I expect to be having a discussion with our board as part of our 2017 planning process with regards to our dividends strategy to go forward.

And certainly as we go forward and are in somewhat stronger price environment, I would choose to allocate some capital towards increasing the dividend overtime. .

Got it. Okay and then the next priority after that would really just be incremental cash flow to kind of above 50 would be the next phase of Cristian and really by pass are not something kind of being contemplated at this point is unfair..

Correct..

Okay, that's it. Thanks..

Thank you..

The next question is from Paul Cheng from Barclays..

Hey guys good morning, Brian in your presentation that you have a page talking about something that we are the Thai oil.

Can you elaborate a little bit more I mean how much do we know about the asset what kind of opportunities that we are really talking about any kind of number in terms of resource, EUR or that what kind of building program that one step pricing and moment is -- yes, maybe that available that -- that to develop in and what are the supply costs curve we may be talking about in those?.

Thank you for the question Paul, tell you a little of the opportunities that we have in South East Alberta are -- have got very strong economics of them, its slight oil, we continue to improve our drilling costs there.

We are not able to get into specific response at this point regard to EUR to well those sorts of things but I’ll ask Kieron McFadyen to give a general description of the opportunity that we see there..

That’s fine and Paul a few points to highlight here so this Thai oil portfolio is in our policy block. We think it’s quite significant we see a very significant number of horizon well targets. As Brian said we are not able to talk about recoveries in the right now.

Today as we speak we are drilling a number of appraisal wells, drop wells in order that we can de-risk these targets and this work is essentially on target to be completed by the end of the year.

Early next year when we get the dates and we do an analysis we have a look at the reservoir we’ll sit down and talk about our options and next step going forward. Of course that will be done in line with our planning processes..

You saying that that’s already in existing infrastructure so in other words that should be assumed if your appraisal program could be successful and once you bury it you decide to go ahead into it commercial development.

You can literally start in 2018?.

Yes, this is essentially a well program of horizon a well program, once fracture of this portfolio as its quite flexible you can ramp up pretty quickly but we can also ramp down pretty quickly if that’s necessary..

Can you maybe elaborate a little bit in terms of the raw formation and everything campaign to somewhat to show why you paid that we see in the US I mean what are similarities or differences that you see. .

This speech I cannot go into details..

Okay, thank you..

The next question is from Neil Mehta from Goldman Sachs..

Good morning congrats on the great quarter here, well first question of the quarter itself is price realization that Christina lake were strong I think relative to cars and constant expectations.

Can you talk about some of the dynamics that may have contributed to that?.

I’ll ask bob please to respond to that..

Thank you, Neil, two basic areas that are one on the cost of diluent and we are seeing improvements in our sourcing and cost structure improvements, both from a transportation cost, as well access to diluent.

So some improvements on that side and of course blending in those summer periods is also little more advantageous from how much diluent is required. On the revenue side, the principle improvement again on the fast creek side [ph], you probably noticed transportation costs are down.

What I would say is Q2 is really the more abnormal period; Q3 is more in line with our expectation of what transportation of getting to market is. We did see improvements in our real program volumes up and cost down in our rail program principle from more regionally close sales and some long hauls.

We are seeing improvements in our overall cost structure as volumes increase those costs that are relatively fixed. Move down on our costs per barrel bases so we are seeing a number of different things that have begun to kick in for us to start to bring those costs down..

That’s great and sticking on Christina lake phase G I know we’ll potentially get more clarity on this at the December conference call but on any color that you can provide around your latest thinking on phase G which will be terrific..

And at this time we will take questions from members of the media. [Operator Instructions].

Sorry Mike I just -- Mike, I’ll just respond to Neil second question there on phase G this is Drew Zieglgansberger.

So Neil on Phase G as Brian said in his notes, we are still just updating our cost estimates we are getting the teams to update their execution plans for the field so we know exactly how and what the schedule would be with the costs for that phase and we will be brining that forward here in our discussions in our planning sessions here right now during our budget..

At this time, we will open the call to questions from members of media. [Operator Instructions] We have a question from the line of Frank Muggings [ph] from Bank of America Merrill Lynch..

Okay, its good morning its two questions that I could quickly one I just in terms of where you are in terms of cost cutting, how much additional potentially you see from here and secondly looking at the environmental from an M&A standpoint is that something that you are looking at as a way to answer the additional growth. .

Thanks Frank with regard to continuing approving in our cost structure that we are very focused on that. We see continuing opportunity as we particular in the capital side as we continue to implement new pad designs as an example and things are doing with regard to our drawing costs.

frankly every- there is no stone not being turnover here to look for where we can continue to drive that cost structure down.

As I mentioned we’ve got example where we’re improving our costs within by 35 to 50% on well pads as an example and we have not yet exhausted the opportunities we see there continue to improve particularly on the capital of our side which is really important because that goes to the long term sustainability of the business and our general attitude is that we need to able to have a cost structure that will allows us to compete with marginal barrel of supply here in north America so we are really looking to be a cost leader on North American context.

With regard to M&N activity and our prime focus is the organic portfolio that we have it's very strong. We’ve got lots of growth opportunities as I mentioned we’ve got opportunity Christina to add here and there in the near term, another 50,000 barrels at Phase G.

We’ve regulatory approval for another phase beyond that, at Christina we’ve got two more phases, we've got regulatory approval at Foster Creek [ph] plus Narrows Lake, where we’ve got a 130,000 barrel a day or regulatory approved drill. So really strong organic portfolio which is our prime focus here for the foreseeable future..

Okay, thank you very much..

Then next question is from Kyle [ph] from Asylum Brown..

Ray, you mentioned this 35% to 50% reduction in sustaining costs for your sustaining well pads.

Is that I’m just trying to figure out how much is that is really to the decline in the market for service cost and how much do you expect to retain as to this cost creep up and also is that - is what you are doing at Christine lake is it a trial or is it something you expect to will forward on all sustaining well pads going forward?.

Thanks, Kyle. I’ll ask Drew to respond to that..

The vast majority of this 35 to 50% is in the actual design change that we’ve made so we removed upwards of about 40% of the actual steel and the veils in the different piping content that actually has been in our historical modules so we are obviously getting some benefits from the deflation area environment that we come through however this design is soothing we put in place and started working on back in 2014 and so we believe and expect that these costs will be sustainable by going forward.

Already starting to see some improvement even on our own cost estimates as we install the first one here in Christina Lake. And as far as your second part of this question, this is our new design for our oil sands going forward. So this cost structure change will be inexplicable both at Foster and Christina and at our future assets. .

Okay. Thank you. .

The next question is from Paul Cheng from Barclays..

Thank you.

Just two quick follow-up; Brian, on your assets -- this often assisted pilot project; based on the one that you have the longest one in time already, what has been the -- so often recovery rate so far?.

I will ask Harbir [ph] to respond to that one Paul. Just wanted to circle back on your earlier question with regards to the tidal oil and South East Alberta. We are not in a position to yet give a lot of details in terms of formations and those sorts of things but I do want to put some context around it.

We see the supply costs for, in that area based on our existing performance to be less than $40 WTI equivalent so it’s very strong economics but beyond that at this point we can’t get into specifics and I will ask Harbir now to respond on the sap file. .

Before Harbir answer that, when you say $40 WTI, are you talking about break even or 10% after tax return or what exactly you mean?.

9% after tax. .

9% after tax? Thank you. Sorry Harbir. .

Sorry Paul, with respect to the -- that we have done a number of them and we have always seen recovery factor of the solvents in the 80% to 90% range. That’s how much we get recycled in the future. .

Okay. Because some of your competitors saying that so far no one has been able to achieve more than 60% to 70%. But seems like you guys saying like that’s not the case. .

Yes. 60% to 70% is normally what you see when you are injecting the solvents but after you blow down your -- that’s 80% to 90% number and we have done that a few times at Christina Lake. .

Thank you. Brian just one final one from me. There’s a refinery in the Gulf Coast whose heavy oil refinery is up for sale.

Not that you would be interested on that one or not but just curious from your strategic plan, is that something that you guys would consider, that looking at outside the mid-west refining exposure -- or that to together for better integration for your oil and sands increase. .

Thanks, Paul. So I think we have been very clear that integration downstream, upstream is a core part of Cenovus’s strategy. As Bob mentioned we have recently completed a work of debottlenecking at Wood River which is an organic opportunity for us.

Beyond that today we don’t see any significant opportunities to expand our existing downstream capacity organically. It certainly is something that we would be interested in provided we can clearly demonstrate that there is significant value in the opportunities there would have to be in terms of cost and in terms of heavy capacity.

They will have to line up very much with our fundamental objective to continue to improve the margin in every heavy barrel we produce. .

How about from a location standpoint instead reference [ph] that seemed okay.

I am only interested in the Midwest because it is closest to my operation or you would contemplate outside the Midwest as long as the configuration fits into what you are trying to do?.

I will ask Bob to expand there. There is a number of things he is doing in marketing side as an example to be able to move and sell crude in a different hubs and that but I will let Bob respond. .

Yes, thank you Paul. The key for us is really fit and accessibility so in the past that really limited it principally to pads 2 and pad 4 made sense. Borger was about as far as our reach was but you know anything in North America that can access large amounts of our crude production would be something that will be concentric.

So pad 3 is a very solid refining center with lot of potential and opportunity and it now has the ability to receive considerable Canadian crude so Pad 3 would now be within the scope of areas we would look at. .

Thank you. .

The next question is from [indiscernible] from Bank of America, Merrill Lynch. .

Yes thanks, just a follow up on your comments earlier on in terms of the environmental changes being proposed Just wondering if you could go into more details of how you see that and the potential effects it could have on the company. .

Sure, thanks Frank. I think you are referring to the recent government announcement with regards to the carbon framework. We don’t yet know the details on the implementation of that.

What we have been told is that it will be administered by the provinces so in our case in Alberta, one of the big advantages we have is I think the corporations we have low steam to oil ratios on our oil sands projects which means that we have relatively on an industry basis low emission levels.

We have already been able to achieve about a 30% improvement in our emissions intensity in 2004 through to 2014 period and there is a number of technologies working on to continue to improve our emissions intensity and reduce that on a per barrel basis.

We are actually supportive of the Alberta framework which was announced, I think it was balanced and we have been on the record saying that we do support we broad based carbon tax that goes across a full value chain from production through to including consumption.

We will continue to focus on this cost like we will any other cost so number one we are obviously going to be focused on making sure that everything we do is in the best manner from an environmental perspective but we will continue to focus on how we improve cost structures across the board including any compliance cost with the carbon framework.

I think we are in a very good position to be able to manage that as we go forward. .

Okay. Thank you. Very helpful..

There are no further questions at this time. I will now turn the call over to Brian Ferguson for closing comments. .

Thank you for joining us today. That completes the call. .

This concludes today’s conference. You may now disconnect..