Exhibit 99.3

Cenovus Energy Inc.

Interim Consolidated Financial Statements (unaudited)

For the Period Ended September 30, 2012

(Canadian Dollars)

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (unaudited)

For the period ended September 30,

($ millions, except per share amounts)

		Three Months Ended				Nine Months Ended
	Notes	2012		2011		2012		2011
Revenues	1
Gross sales		4,462		3,989		13,427		11,705
Less: Royalties		122		131		309		338
		4,340		3,858		13,118		11,367
Expenses	1
Purchased product		2,303		2,348		7,335		6,559
Transportation and blending		398		294		1,323		973
Operating		418		340		1,201		1,020
Production and mineral taxes		9		9		28		27
(Gain) loss on risk management	18	194		(460	)	(184	)	(478	)
Depreciation, depletion and amortization		397		318		1,176		912
Exploration expense	10	-		-		68		-
General and administrative		104		38		254		206
Finance costs	3	120		112		344		335
Interest income	4	(28	)	(31	)	(84	)	(94	)
Foreign exchange (gain) loss, net	5	(51	)	85		(42	)	56
(Gain) loss on divestiture of assets		1		-		-		(3	)
Other (income) loss, net		-		1		(4	)	1
Earnings Before Income Tax		475		804		1,703		1,853
Income tax expense	6	186		294		592		641
Net Earnings		289		510		1,111		1,212
Other Comprehensive Income (Loss), Net of Tax
Foreign currency translation adjustment		(45	)	100		(36	)	73
Comprehensive Income		244		610		1,075		1,285
Net Earnings per Common Share	7
Basic		$ 0.38		$ 0.68		$ 1.47		$ 1.61
Diluted		$ 0.38		$ 0.67		$ 1.46		$ 1.60

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. 2 For the period ended September 30, 2012

CONSOLIDATED BALANCE SHEETS (unaudited)

As at

($ millions)

	Notes	September 30, 2012	December 31, 2011
Assets
Current Assets
Cash and cash equivalents		1,543	495
Accounts receivable and accrued revenues		1,765	1,405
Current portion of Partnership Contribution Receivable		375	372
Inventories	8	1,221	1,291
Risk management	18	163	232
Assets held for sale	9	-	116
Current Assets		5,067	3,911
Exploration and Evaluation Assets	1,10	1,269	880
Property, Plant and Equipment, net	1,11	15,353	14,324
Partnership Contribution Receivable		1,479	1,822
Risk Management	18	31	52
Income Tax Receivable		-	29
Other Assets		53	44
Goodwill	1	1,132	1,132
Total Assets		24,384	22,194
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable and accrued liabilities		2,760	2,579
Income tax payable		234	329
Current portion of Partnership Contribution Payable		376	372
Risk management	18	39	54
Liabilities related to assets held for sale	9	-	54
Current Liabilities		3,409	3,388
Long-Term Debt	12	4,626	3,527
Partnership Contribution Payable		1,508	1,853
Risk Management	18	4	14
Decommissioning Liabilities	13	2,126	1,777
Other Liabilities		153	128
Deferred Income Taxes		2,494	2,101
Total Liabilities		14,320	12,788
Shareholders’ Equity		10,064	9,406
Total Liabilities and Shareholders’ Equity		24,384	22,194

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. 3 For the period ended September 30, 2012

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (unaudited)

($ millions)

	Share Capital (Note 14)	Paid in Surplus	Retained Earnings		AOCI *		Total
Balance as at December 31, 2010	3,716	4,083	525		71		8,395
Net earnings	-	-	1,212		-		1,212
Other comprehensive income (loss)	-	-	-		73		73
Total comprehensive income (loss) for the period	-	-	1,212		73		1,285
Common shares issued under option plans	59	-	-		-		59
Stock-based compensation expense	-	17	-		-		17
Dividends on common shares	-	-	(452	)	-		(452	)
Balance as at September 30, 2011	3,775	4,100	1,285		144		9,304
Balance as at December 31, 2011	3,780	4,107	1,400		119		9,406
Net earnings	-	-	1,111		-		1,111
Other comprehensive income (loss)	-	-	-		(36	)	(36	)
Total comprehensive income (loss) for the period	-	-	1,111		(36	)	1,075
Common shares issued under option plans	47	-	-		-		47
Stock-based compensation expense	-	34	-		-		34
Dividends on common shares	-	-	(498	)	-		(498	)
Balance as at September 30, 2012	3,827	4,141	2,013		83		10,064

* Accumulated Other Comprehensive Income.

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. 4 For the period ended September 30, 2012

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

For the period ended September 30,

($ millions)

		Three Months Ended				Nine Months Ended
	Notes	2012		2011		2012		2011
Operating Activities
Net earnings		289		510		1,111		1,212
Depreciation, depletion and amortization		397		318		1,176		912
Exploration expense		-		-		68		-
Deferred income taxes	6	110		258		408		551
Unrealized (gain) loss on risk management	18	293		(381	)	60		(422	)
Unrealized foreign exchange (gain) loss	5	(60	)	63		(82	)	1
(Gain) loss on divestiture of assets		1		-		-		(3	)
Unwinding of discount on decommissioning liabilities	3,13	22		19		64		56
Other		65		6		141		118
		1,117		793		2,946		2,425
Net change in other assets and liabilities		(19	)	(17	)	(71	)	(62	)
Net change in non-cash working capital		(69	)	145		(213	)	(42	)
Cash From Operating Activities		1,029		921		2,662		2,321
Investing Activities
Capital expenditures – exploration and evaluation assets	10	(104	)	(39	)	(451	)	(341	)
Capital expenditures – property, plant and equipment	11	(734	)	(593	)	(1,983	)	(1,498	)
Proceeds from divestiture of assets		-		-		65		8
Net change in investments and other		5		1		(10	)	(21	)
Net change in non-cash working capital		92		48		18		(7	)
Cash (Used in) Investing Activities		(741	)	(583	)	(2,361	)	(1,859	)
Net Cash Provided (Used) before Financing Activities		288		338		301		462
Financing Activities
Net issuance (repayment) of short-term borrowings		(204	)	(87	)	3		(3	)
Issuance of long-term debt		1,219		-		1,219		-
Proceeds on issuance of common shares		3		6		35		44
Dividends paid on common shares	7	(166	)	(150	)	(498	)	(452	)
Other		-		(3	)	1		(3	)
Cash From (Used in) Financing Activities		852		(234	)	760		(414	)
Foreign Exchange Gain (Loss) on Cash and Cash Equivalents Held in Foreign Currency		(6	)	9		(13	)	10
Increase (Decrease) in Cash and Cash Equivalents		1,134		113		1,048		58
Cash and Cash Equivalents, Beginning of Period		409		245		495		300
Cash and Cash Equivalents, End of Period		1,543		358		1,543		358

See accompanying Notes to Consolidated Financial Statements (unaudited).

Cenovus Energy Inc. 5 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

1. DESCRIPTION OF BUSINESS AND SEGMENTED DISCLOSURES

Cenovus Energy Inc. and its subsidiaries (together “Cenovus” or the “Company”) are in the business of the development, production and marketing of crude oil, natural gas and natural gas liquids (“NGLs”) in Canada with refining operations in the United States (“U.S.”).

Cenovus began independent operations on December 1, 2009, as a result of the plan of arrangement (“Arrangement”) involving Encana Corporation (“Encana”) whereby Encana was split into two independent energy companies, one a natural gas company, Encana, and the other an oil company, Cenovus. In connection with the Arrangement, Encana common shareholders received one share in each of the new Encana and Cenovus in exchange for each Encana share held.

Cenovus was incorporated under the Canada Business Corporations Act and its shares are publicly traded on the Toronto (“TSX”) and New York (“NYSE”) stock exchanges. The executive and registered office is located at #4000, 421 - 7th Avenue S.W., Calgary, Alberta, Canada, T2P 4K9. Information on the Company’s basis of presentation for these financial statements is found in Note 2.

The Company’s reportable segments are as follows:

·Oil Sands,which consists of Cenovus’s producing bitumen assets at Foster Creek and Christina Lake, heavy oil assets at Pelican Lake, new resource play assets such as Narrows Lake, Grand Rapids and Telephone Lake, and the Athabasca natural gas assets. Certain of the Company’s operated oil sands properties, notably Foster Creek, Christina Lake and Narrows Lake, are jointly owned with ConocoPhillips, an unrelated U.S. public company.

·Conventional, which includes the development and production of conventional crude oil, natural gas and NGLs in Alberta and Saskatchewan, notably the carbon dioxide enhanced oil recovery project at Weyburn, and the Bakken and Lower Shaunavon crude oil properties.

·Refining and Marketing, which is focused on the refining of crude oil products into petroleum and chemical products at two refineries located in the U.S. The refineries are jointly owned with and operated by Phillips 66, an unrelated U.S. public company. This segment also markets Cenovus’s crude oil and natural gas, as well as third-party purchases and sales of product that provide operational flexibility for transportation commitments, product type, delivery points and customer diversification.

·Corporate and Eliminations,which primarily includes unrealized gains and losses recorded on derivative financial instruments, gains and losses on divestiture of assets, as well as other Cenovus-wide costs for general and administrative, and financing activities. As financial instruments are settled, the realized gains and losses are recorded in the operating segment to which the derivative instrument relates. Eliminations relate to sales and operating revenues and purchased product between segments recorded at transfer prices based on current market prices and to unrealized intersegment profits in inventory.

The tabular financial information which follows presents the segmented information first by segment, then by product and geographic location.

Cenovus Energy Inc. 6 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

A) Results of Operations - Segment and Operational Information (For the Three Months Ended September 30)

	Oil Sands				Conventional				Refining and Marketing
	2012		2011		2012		2011		2012	2011
Revenues
Gross sales	1,007		754		489		553		3,066	2,691
Less: Royalties	83		82		39		49		-	-
	924		672		450		504		3,066	2,691
Expenses
Purchased product	-		-		-		-		2,403	2,357
Transportation and blending	367		263		31		31		-	-
Operating	150		108		133		121		136	112
Production and mineral taxes	-		-		9		9		-	-
(Gain) loss on risk management	(28	)	(12	)	(71	)	(51	)	-	(16	)
Operating Cash Flow	435		313		348		394		527	238
Depreciation, depletion and amortization	127		93		222		195		36	20
Exploration expense	-		-		-		-		-	-
Segment Income (Loss)	308		220		126		199		491	218

	Corporate and Eliminations				Consolidated
	2012		2011		2012		2011
Revenues
Gross sales	(100	)	(9	)	4,462		3,989
Less: Royalties	-		-		122		131
	(100	)	(9	)	4,340		3,858
Expenses
Purchased product	(100	)	(9	)	2,303		2,348
Transportation and blending	-		-		398		294
Operating	(1	)	(1	)	418		340
Production and mineral taxes	-		-		9		9
(Gain) loss on risk management	293		(381	)	194		(460	)
	(292	)	382		1,018		1,327
Depreciation, depletion and amortization	12		10		397		318
Exploration expense	-		-		-		-
Segment Income (Loss)	(304	)	372		621		1,009
General and administrative	104		38		104		38
Finance costs	120		112		120		112
Interest income	(28	)	(31	)	(28	)	(31	)
Foreign exchange (gain) loss, net	(51	)	85		(51	)	85
(Gain) loss on divestiture of assets	1		-		1		-
Other (income) loss, net	-		1		-		1
	146		205		146		205
Earnings Before Income Tax					475		804
Income tax expense					186		294
Net Earnings					289		510

Cenovus Energy Inc. 7 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

B) Financial Results by Upstream Product (For the Three Months Ended September 30)

	Crude Oil and NGLs
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	998		736		368		339		1,366		1,075
Less: Royalties	84		82		38		46		122		128
	914		654		330		293		1,244		947
Expenses
Transportation and blending	367		263		27		23		394		286
Operating	142		103		78		61		220		164
Production and mineral taxes	-		-		7		7		7		7
(Gain) loss on risk management	(23	)	(8	)	(9	)	(7	)	(32	)	(15	)
Operating Cash Flow	428		296		227		209		655		505

	Natural Gas
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	7		17		116		211		123		228
Less: Royalties	(1	)	-		1		3		-		3
	8		17		115		208		123		225
Expenses
Transportation and blending	-		-		4		8		4		8
Operating	5		4		53		59		58		63
Production and mineral taxes	-		-		2		2		2		2
(Gain) loss on risk management	(5	)	(4	)	(62	)	(44	)	(67	)	(48	)
Operating Cash Flow	8		17		118		183		126		200

	Other
	Oil Sands			Conventional		Total
	2012		2011	2012	2011	2012	2011
Revenues
Gross sales	2		1	5	3	7	4
Less: Royalties	-		-	-	-	-	-
	2		1	5	3	7	4
Expenses
Transportation and blending	-		-	-	-	-	-
Operating	3		1	2	1	5	2
Production and mineral taxes	-		-	-	-	-	-
(Gain) loss on risk management	-		-	-	-	-	-
Operating Cash Flow	(1	)	-	3	2	2	2

	Total Upstream
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	1,007		754		489		553		1,496		1,307
Less: Royalties	83		82		39		49		122		131
	924		672		450		504		1,374		1,176
Expenses
Transportation and blending	367		263		31		31		398		294
Operating	150		108		133		121		283		229
Production and mineral taxes	-		-		9		9		9		9
(Gain) loss on risk management	(28	)	(12	)	(71	)	(51	)	(99	)	(63	)
Operating Cash Flow	435		313		348		394		783		707

Cenovus Energy Inc. 8 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

C) Geographic Information (For the Three Months Ended September 30)

	Canada			United States			Consolidated
	2012	2011		2012	2011		2012	2011
Revenues
Gross sales	2,006	1,768		2,456	2,221		4,462	3,989
Less: Royalties	122	131		-	-		122	131
	1,884	1,637		2,456	2,221		4,340	3,858
Expenses
Purchased product	502	452		1,801	1,896		2,303	2,348
Transportation and blending	398	294		-	-		398	294
Operating	289	232		129	108		418	340
Production and mineral taxes	9	9		-	-		9	9
(Gain) loss on risk management	189	(429	)	5	(31	)	194	(460	)
	497	1,079		521	248		1,018	1,327
Depreciation, depletion and amortization	361	298		36	20		397	318
Exploration expense	-	-		-	-		-	-
Segment Income (Loss)	136	781		485	228		621	1,009

The Oil Sands and Conventional segments operate in Canada. Both of Cenovus’s refining facilities are located and carry on business in the U.S. The marketing of Cenovus’s crude oil and natural gas produced in Canada, as well as the third party purchases and sales of product, is undertaken in Canada. Physical product sales that settle in the U.S. are considered to be export sales undertaken by a Canadian business. The Corporate and Eliminations segment is attributed to Canada with the exception of the unrealized risk management gains and losses which have been attributed to the country in which the transacting entity resides.

Cenovus Energy Inc. 9 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

D) Results of Operations - Segment and Operational Information (For the Nine Months Ended September 30)

	Oil Sands			Conventional				Refining and Marketing
	2012		2011	2012		2011		2012		2011
Revenues
Gross sales	3,026		2,340	1,546		1,717		9,020		7,698
Less: Royalties	175		190	134		148		-		-
	2,851		2,150	1,412		1,569		9,020		7,698
Expenses
Purchased product	-		-	-		-		7,500		6,609
Transportation and blending	1,212		869	111		104		-		-
Operating	432		321	382		351		389		349
Production and mineral taxes	-		-	28		27		-		-
(Gain) loss on risk management	(35	)	49	(195	)	(102	)	(14	)	(3	)
Operating Cash Flow	1,242		911	1,086		1,189		1,145		743
Depreciation, depletion and amortization	352		254	680		575		109		54
Exploration expense	-		-	68		-		-		-
Segment Income (Loss)	890		657	338		614		1,036		689
				Corporate and Eliminations				Consolidated
				2012		2011		2012		2011
Revenues
Gross sales				(165	)	(50	)	13,427		11,705
Less: Royalties				-		-		309		338
				(165	)	(50	)	13,118		11,367
Expenses
Purchased product				(165	)	(50	)	7,335		6,559
Transportation and blending				-		-		1,323		973
Operating				(2	)	(1	)	1,201		1,020
Production and mineral taxes				-		-		28		27
(Gain) loss on risk management				60		(422	)	(184	)	(478	)
				(58	)	423		3,415		3,266
Depreciation, depletion and amortization				35		29		1,176		912
Exploration expense				-		-		68		-
Segment Income (Loss)				(93	)	394		2,171		2,354
General and administrative				254		206		254		206
Finance costs				344		335		344		335
Interest income				(84	)	(94	)	(84	)	(94	)
Foreign exchange (gain) loss, net				(42	)	56		(42	)	56
(Gain) loss on divestiture of assets				-		(3	)	-		(3	)
Other (income) loss, net				(4	)	1		(4	)	1
				468		501		468		501
Earnings Before Income Tax								1,703		1,853
Income tax expense								592		641
Net Earnings								1,111		1,212

Cenovus Energy Inc. 10 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

E) Financial Results by Upstream Product (For the Nine Months Ended September 30)

	Crude Oil and NGLs
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	2,994		2,286		1,187		1,076		4,181		3,362
Less: Royalties	175		189		130		139		305		328
	2,819		2,097		1,057		937		3,876		3,034
Expenses
Transportation and blending	1,211		868		96		78		1,307		946
Operating	405		301		224		175		629		476
Production and mineral taxes	-		-		24		19		24		19
(Gain) loss on risk management	(20	)	61		(9	)	30		(29	)	91
Operating Cash Flow	1,223		867		722		635		1,945		1,502
	Natural Gas
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	25		47		350		633		375		680
Less: Royalties	-		1		4		9		4		10
	25		46		346		624		371		670
Expenses
Transportation and blending	1		1		15		26		16		27
Operating	18		17		155		173		173		190
Production and mineral taxes	-		-		4		8		4		8
(Gain) loss on risk management	(15	)	(12	)	(186	)	(132	)	(201	)	(144	)
Operating Cash Flow	21		40		358		549		379		589
	Other
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	7		7		9		8		16		15
Less: Royalties	-		-		-		-		-		-
	7		7		9		8		16		15
Expenses
Transportation and blending	-		-		-		-		-		-
Operating	9		3		3		3		12		6
Production and mineral taxes	-		-		-		-		-		-
(Gain) loss on risk management	-		-		-		-		-		-
Operating Cash Flow	(2	)	4		6		5		4		9
	Total Upstream
	Oil Sands				Conventional				Total
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	3,026		2,340		1,546		1,717		4,572		4,057
Less: Royalties	175		190		134		148		309		338
	2,851		2,150		1,412		1,569		4,263		3,719
Expenses
Transportation and blending	1,212		869		111		104		1,323		973
Operating	432		321		382		351		814		672
Production and mineral taxes	-		-		28		27		28		27
(Gain) loss on risk management	(35	)	49		(195	)	(102	)	(230	)	(53	)
Operating Cash Flow	1,242		911		1,086		1,189		2,328		2,100

Cenovus Energy Inc. 11 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

F) Geographic Information (For the Nine Months Ended September 30)

	Canada				United States				Consolidated
	2012		2011		2012		2011		2012		2011
Revenues
Gross sales	6,059		5,412		7,368		6,293		13,427		11,705
Less: Royalties	309		338		-		-		309		338
	5,750		5,074		7,368		6,293		13,118		11,367
Expenses
Purchased product	1,466		1,330		5,869		5,229		7,335		6,559
Transportation and blending	1,323		973		-		-		1,323		973
Operating	830		688		371		332		1,201		1,020
Production and mineral taxes	28		27		-		-		28		27
(Gain) loss on risk management	(169	)	(459	)	(15	)	(19	)	(184	)	(478	)
	2,272		2,515		1,143		751		3,415		3,266
Depreciation, depletion and amortization	1,067		858		109		54		1,176		912
Exploration expense	68		-		-		-		68		-
Segment Income (Loss)	1,137		1,657		1,034		697		2,171		2,354

The Oil Sands and Conventional segments operate in Canada. Both of Cenovus’s refining facilities are located and carry on business in the U.S. The marketing of Cenovus’s crude oil and natural gas produced in Canada, as well as the third party purchases and sales of product, is undertaken in Canada. Physical product sales that settle in the U.S. are considered to be export sales undertaken by a Canadian business. The Corporate and Eliminations segment is attributed to Canada with the exception of the unrealized risk management gains and losses which have been attributed to the country in which the transacting entity resides.

G) Exploration and Evaluation Assets, Property, Plant and Equipment, Goodwill and Total Assets

By Segment

	Exploration and Evaluation Assets		Property, Plant and Equipment
As at	September 30, 2012	December 31, 2011	September 30, 2012	December 31, 2011
Oil Sands	1,148	741	7,128	6,224
Conventional	121	139	4,848	4,668
Refining and Marketing	-	-	3,047	3,200
Corporate and Eliminations	-	-	330	232
Consolidated	1,269	880	15,353	14,324
	Goodwill		Total Assets
As at	September 30, 2012	December 31, 2011	September 30, 2012	December 31, 2011
Oil Sands	739	739	11,532	10,524
Conventional	393	393	5,580	5,566
Refining and Marketing	-	-	5,069	4,927
Corporate and Eliminations	-	-	2,203	1,177
Consolidated	1,132	1,132	24,384	22,194

Cenovus Energy Inc. 12 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

By Geographic Region

	Exploration and Evaluation Assets		Property, Plant and Equipment
As at	September 30, 2012	December 31, 2011	September 30, 2012	December 31, 2011
Canada	1,269	880	12,307	11,124
United States	-	-	3,046	3,200
Consolidated	1,269	880	15,353	14,324
	Goodwill		Total Assets
As at	September 30, 2012	December 31, 2011	September 30, 2012	December 31, 2011
Canada	1,132	1,132	19,848	17,536
United States	-	-	4,536	4,658
Consolidated	1,132	1,132	24,384	22,194

H) Capital Expenditures

	Three Months Ended		Nine Months Ended
For the period ended September 30,	2012	2011	2012	2011
Capital
Oil Sands	516	306	1,606	950
Conventional	231	193	591	458
Refining and Marketing	38	101	60	320
Corporate	45	31	133	92
	830	631	2,390	1,820
Acquisition Capital
Oil Sands	2	-	2	4
Conventional	6	1	42	15
Corporate	-	-	-	3
Total	838	632	2,434	1,842

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 International Financial Reporting Standards (“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” (“IAS 34”) 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, 2011 except for income taxes on earnings in the interim periods are accrued using the income tax rate that would be applicable to the expected total annual earnings or loss. The disclosures provided below are incremental to those included with the annual Consolidated Financial Statements. 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, 2011, which have been prepared in accordance with IFRS as issued by the IASB.

These interim Consolidated Financial Statements of Cenovus were approved by the Audit Committee effective October 24, 2012.

Cenovus Energy Inc. 13 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

3. FINANCE COSTS

	Three Months Ended		Nine Months Ended
For the period ended September 30,	2012	2011	2012	2011
Interest Expense – Short-Term Borrowings and Long-Term Debt	59	54	166	160
Interest Expense – Partnership Contribution Payable	29	34	91	104
Unwinding of Discount on Decommissioning Liabilities	22	19	64	56
Other	10	5	23	15
	120	112	344	335

4. INTEREST INCOME

	Three Months Ended				Nine Months Ended
For the period ended September 30,	2012		2011		2012		2011
Interest Income – Partnership Contribution Receivable	(25	)	(30	)	(79	)	(91	)
Other	(3	)	(1	)	(5	)	(3	)
	(28	)	(31	)	(84	)	(94	)

5. FOREIGN EXCHANGE (GAIN) LOSS, NET

	Three Months Ended				Nine Months Ended
For the period ended September 30,	2012		2011		2012		2011
Unrealized Foreign Exchange (Gain) Loss on translation of:
U.S. dollar debt issued from Canada	(129	)	261		(122	)	155
U.S. dollar Partnership Contribution Receivable issued from Canada	53		(185	)	22		(144	)
Other	16		(13	)	18		(10	)
Unrealized Foreign Exchange (Gain) Loss	(60	)	63		(82	)	1
Realized Foreign Exchange (Gain) Loss	9		22		40		55
	(51	)	85		(42	)	56

6. INCOME TAXES

The provision for income taxes is as follows:

	Three Months Ended		Nine Months Ended
For the period ended September 30,	2012	2011	2012	2011
Current Tax
Canada	56	35	139	88
United States	20	1	45	2
Total Current Tax	76	36	184	90
Deferred Tax	110	258	408	551
	186	294	592	641

Cenovus Energy Inc. 14 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

7. PER SHARE AMOUNTS

A) Net Earnings per Share

	September 30, 2012			September 30, 2011
For the three months ended ($ millions, except earnings per share)	Net Earnings	Shares	Earnings per Share	Net Earnings	Shares	Earnings per Share
Net earnings per share – basic	289	755.7	$0.38	510	754.3	$0.68
Dilutive effect of Cenovus TSARs	-	2.3		-	3.5
Net earnings per share – diluted	289	758.0	$0.38	510	757.8	$0.67
	September 30, 2012			September 30, 2011
For the nine months ended ($ millions, except earnings per share)	Net Earnings	Shares	Earnings per Share	Net Earnings	Shares	Earnings per Share
Net earnings per share – basic	1,111	755.5	$1.47	1,212	753.9	$1.61
Dilutive effect of Cenovus TSARs	-	3.0		-	4.0
Net earnings per share – diluted	1,111	758.5	$1.46	1,212	757.9	$1.60

B) Dividends per Share

The Company paid dividends of $498 million, $0.66 per share, for the nine months ended September 30, 2012 (September 30, 2011 – $452 million, $0.60 per share).

The Cenovus Board of Directors declared a fourth quarter dividend of $0.22 per share, payable on December 31, 2012, to common shareholders of record as of December 14, 2012.

8. INVENTORIES

As at	September 30, 2012	December 31,  2011
Product
Refining and Marketing	994	1,079
Oil Sands	194	186
Conventional	1	1
Parts and Supplies	32	25
	1,221	1,291

9. ASSETS AND LIABILITIES HELD FOR SALE

Assets and liabilities classified as held for sale consisted of the following:

As at	September 30, 2012	December 31, 2011
Assets Held for Sale
Property, plant and equipment	-	116
Liabilities Related to Assets Held for Sale
Decommissioning liabilities	-	54

In January 2012, the Company completed the sale of non-core natural gas assets located in Northern Alberta.  A loss of $2 million was recorded on the sale. These assets and the related liabilities were reported in the Conventional segment.

Cenovus Energy Inc. 15 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

10. EXPLORATION AND EVALUATION ASSETS

	E&E
COST
As at December 31, 2010	713
Additions	527
Transfers to property, plant and equipment (Note 11)	(356	)
Divestitures	(3	)
Change in decommissioning liabilities	(1	)
As at December 31, 2011	880
Additions	451
Transfers to property, plant and equipment (Note 11)	(1	)
Exploration expense	(68	)
Divestitures	-
Change in decommissioning liabilities	7
As at September 30, 2012	1,269

Exploration and evaluation assets (“E&E assets”) consist of the Company’s evaluation projects which are pending the determination of technical feasibility and commercial viability. All of the Company’s E&E assets are located within Canada.

Additions to E&E assets for the nine months ended September 30, 2012 include $26 million of internal costs directly related to the evaluation of these projects (year ended December 31, 2011 – $15 million). Costs classified as general and administrative expenses have not been capitalized as part of capital expenditures. No borrowing costs have been capitalized during the nine months ended September 30, 2012 or for the year ended December 31, 2011.

For the nine months ended September 30, 2012, $1 million of E&E assets were transferred to property, plant and equipment – development and production assets following the determination of technical feasibility and commercial viability of the projects in question (year ended December 31, 2011 – $356 million).

Impairment

The impairment of E&E assets and any subsequent reversal of such impairment losses are recognized in exploration expense in the Consolidated Statements of Earnings and Comprehensive Income. During the nine months ended September 30, 2012, $68 million of previously capitalized E&E costs related primarily to the Roncott assets within the Conventional segment were deemed not to be technically feasible and commercially viable and were recognized as exploration expense. There were no amounts expensed for the nine months ended September 30, 2011.

Cenovus Energy Inc. 16 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

11. PROPERTY, PLANT AND EQUIPMENT, NET

	Upstream Assets
	Development & Production		OtherUpstream	Refining Equipment		Other	1	Total
COST
As at December 31, 2010	21,720		153	2,950		450		25,273
Additions	1,704		41	391		131		2,267
Transfers from E&E assets (Note 10)	356		-	-		-		356
Transfers and reclassifications	(326	)	-	(5	)	(2	)	(333	)
Change in decommissioning liabilities	403		-	10		1		414
Exchange rate movements	1		-	79		-		80
Divestitures	-		-	-		(4	)	(4	)
As at December 31, 2011	23,858		194	3,425		576		28,053
Additions	1,759		31	59		134		1,983
Transfers from E&E assets (Note 10)	1		-	-		-		1
Transfers and reclassifications	-		-	(44	)	-		(44	)
Change in decommissioning liabilities	324		-	-		-		324
Exchange rate movements	1		-	(112	)	-		(111	)
Divestitures	-		-	-		-		-
As at September 30, 2012	25,943		225	3,328		710		30,206
ACCUMULATED DEPRECIATION, DEPLETION AND IMPAIRMENT
As at December 31, 2010	12,121		124	97		304		12,646
Depreciation and depletion expense	1,108		15	85		40		1,248
Transfers and reclassifications	(211	)	-	(5	)	-		(216	)
Impairment losses	2		-	45		-		47
Exchange rate movements	1		-	3		-		4
As at December 31, 2011	13,021		139	225		344		13,729
Depreciation and depletion expense	1,019		13	109		35		1,176
Transfers and reclassifications	-		-	(44	)	-		(44	)
Impairment losses	-		-	-		-		-
Exchange rate movements	-		-	(8	)	-		(8	)
Divestitures	-		-	-		-		-
As at September 30, 2012	14,040		152	282		379		14,853
CARRYING VALUE
As at December 31, 2010	9,599		29	2,853		146		12,627
As at December 31, 2011	10,837		55	3,200		232		14,324
As at September 30, 2012	11,903		73	3,046		331		15,353

1.Includes office furniture, fixtures, leasehold improvements, information technology, midstream assets, and aircraft.

Additions to development and production assets include internal costs directly related to the development and construction of oil and gas properties of $121 million for the nine months ended September 30, 2012 (December 31, 2011 – $125 million). All of the Company’s development and production assets are located within Canada. Costs classified as general and administrative expenses have not been capitalized as part of capital expenditures. No borrowing costs have been capitalized during the nine months ended September 30, 2012 or for the year ended December 31, 2011.

Property, plant and equipment include the following amounts in respect of assets not available for use which are not subject to depreciation until put into use:

As at	September 30, 2012	December 31,  2011
Development and production	41	52
Refining equipment	87	125
Other	201	112
	329	289

Cenovus Energy Inc. 17 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

Impairment

The impairment of property, plant and equipment and any subsequent reversal of such impairment losses are recognized in depreciation, depletion and amortization in the Consolidated Statement of Earnings and Comprehensive Income. There were no impairment losses recorded for the nine months ended September 30, 2012 or 2011.

12. LONG-TERM DEBT

As at	September 30, 2012		December 31, 2011
Canadian Dollar Denominated Debt
Revolving term debt 1	-		-
U.S. Dollar Denominated Debt
Revolving term debt 1	-		-
Unsecured notes	4,673		3,559
	4,673		3,559
Total Debt Principal	4,673		3,559
Debt Discounts and Transaction Costs	(47	)	(32	)
Current Portion of Long-Term Debt	-		-
	4,626		3,527

1.Revolving term debt may include bankers’ acceptances, LIBOR loans, prime rate loans and U.S. base rate loans.

As at September 30, 2012, the Company is in compliance with all of the terms of its debt agreements.

On May 24, 2012, Cenovus filed a Canadian base shelf prospectus for unsecured medium term notes in the amount of $1.5 billion. The Canadian shelf prospectus allows for the issuance of medium term notes in Canadian dollars or other foreign currencies from time to time in one or more offerings. Terms of the notes, including, but not limited to, interest at either fixed or floating rates and expiry dates will be determined at the date of issue. As at September 30, 2012, no medium term notes have been issued under this Canadian shelf prospectus. The Canadian shelf prospectus expires in June 2014.

On June 6, 2012, Cenovus filed a U.S. base shelf prospectus for unsecured notes in the amount of US$2.0 billion. The U.S. shelf prospectus allows for the issuance of debt securities in U.S. dollars or other foreign currencies from time to time in one or more offerings. Terms of the notes, including, but not limited to, interest at either fixed or floating rates and expiry dates will be determined at the date of issue. As at September 30, 2012, US$750 million remains under this U.S. shelf prospectus. The U.S. shelf prospectus expires in July 2014.

On August 17, 2012 Cenovus completed a public offering in the U.S. of senior unsecured notes in the aggregate principal amount of US$1.25 billion under the Company’s U.S. base shelf prospectus. The net proceeds will be used for general corporate purposes, including repayment of commercial paper indebtedness. The unsecured notes issued are as follows:

	US$ Principal  Amount	September 30,  2012
3.00% due August 15, 2022	500	492
4.45% due September 15, 2042	750	738
	1,250	1,230

In September 2012, Cenovus renegotiated its existing $3.0 billion committed credit facility, extending the   maturity date to November 30, 2016 and slightly reducing both the standby fees required to maintain the facility as well as the cost of future borrowings.

Cenovus Energy Inc. 18 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

13. DECOMMISSIONING LIABILITIES

The decommissioning provision represents the present value of the future costs associated with the retirement of upstream oil and gas assets and refining facilities. The aggregate carrying amount of the obligation is as follows:

As at	September 30,  2012		December 31,  2011
Decommissioning Liabilities, Beginning of Year	1,777		1,399
Liabilities incurred	51		49
Liabilities settled	(48	)	(56	)
Liabilities divested	-		-
Transfers and reclassifications	3		(55	)
Change in estimated future cash flows	7		146
Change in discount rate	273		218
Unwinding of discount on decommissioning liabilities	64		75
Foreign currency translation	(1	)	1
Decommissioning Liabilities, End of Period	2,126		1,777

The undiscounted amount of estimated cash flows required to settle the obligation has been discounted using a credit-adjusted risk-free rate of 4.2 percent as at September 30, 2012 (December 31, 2011 – 4.8 percent).

14. SHARE CAPITAL

A) Authorized

Cenovus is authorized to issue an unlimited number of common shares, an unlimited number of First Preferred Shares and an unlimited number of Second Preferred Shares. The First and Second Preferred Shares may be issued in one or more series with rights and conditions to be determined by the Company’s Board of Directors prior to issuance and subject to the Company’s articles.

B) Issued and Outstanding

	September 30, 2012		December 31, 2011
As at	Number of Common Shares (thousands)	Amount	Number of Common Shares (thousands)	Amount
Outstanding, Beginning of Year	754,499	3,780	752,675	3,716
Common Shares Issued under Stock Option Plans	1,271	47	1,824	64
Outstanding, End of Period	755,770	3,827	754,499	3,780

There were no Preferred Shares outstanding as at September 30, 2012 (December 31, 2011 – nil).

As at September 30, 2012, there were 28 million (December 31, 2011 – 30 million) common shares available for future issuance under stock option plans.

15. STOCK-BASED COMPENSATION PLANS

A) Employee Stock Option Plan

Cenovus has an Employee Stock Option Plan that provides employees with the opportunity to exercise an option to purchase common shares of the Company. Option exercise prices approximate the market price for the common shares on the date the options were issued. Options granted are exercisable at 30 percent of the number granted after one year, an additional 30 percent of the number granted after two years, and are fully exercisable after three years. Options granted prior to February 17, 2010 expire after five years while options granted on or after February 17, 2010 expire after seven years.

Cenovus Energy Inc. 19 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

Options issued by the Company under the Employee Stock Option Plan prior to February 24, 2011 have associated tandem stock appreciation rights. In lieu of exercising the options, the tandem stock appreciation rights give the option holder the right to receive a cash payment equal to the excess of the market price of Cenovus’s common shares at the time of exercise over the exercise price of the option.

Options issued by the Company on or after February 24, 2011 have associated net settlement rights. The net settlement rights, in lieu of exercising the option, give the option holder the right to receive the number of common shares that could be acquired with the excess value of the market price of Cenovus’s common shares at the time of exercise over the exercise price of the option.

The tandem stock appreciation rights and net settlement rights vest and expire under the same terms and conditions as the underlying options. For the purpose of this financial statement note, options with associated tandem stock appreciation rights are referred to as “TSARs” and options with associated net settlement rights are referred to as “NSRs”.

In addition, certain of the TSARs are performance based (“Performance TSARs”). The Performance TSARs vest and expire under the same terms and service conditions as the underlying option, and have an additional vesting requirement whereby vesting is subject to achievement of prescribed performance relative to pre-determined key measures. Performance TSARs that do not vest when eligible are forfeited.

In accordance with the Arrangement described in Note 1, each Cenovus and Encana employee exchanged their original Encana TSAR for one Cenovus Replacement TSAR and one Encana Replacement TSAR. The terms and conditions of the Cenovus and Encana Replacement TSARs are similar to the terms and conditions of the original Encana TSAR. The original exercise price of the Encana TSAR was apportioned to the Cenovus and Encana Replacement TSARs based on the one day volume weighted average trading price of Cenovus’s common share price relative to that of Encana’s common share price on the TSX on December 2, 2009. Cenovus TSARs and Cenovus Replacement TSARs are measured against the Cenovus common share price while Encana Replacement TSARs are measured against the Encana common share price. The Cenovus Replacement TSARs have similar vesting provisions as outlined above for the Employee Stock Option Plan. The original Encana Performance TSARs were also exchanged under the same terms as the original Encana TSARs.

As at September 30, 2012	Issued	Term (years)	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price ($)	Closing Share Price ($)	Units Outstanding (thousands)
Encana Replacement TSARs held by Cenovus Employees	Prior to Arrangement	5	0.91	32.66	21.53	7,812
Cenovus Replacement TSARs held by Encana Employees	Prior to Arrangement	5	0.94	29.34	34.31	5,446
TSARs	Prior to February 17, 2010	5	0.96	29.33	34.31	6,409
TSARs	On or After February 17, 2010	7	4.45	26.72	34.31	5,095
NSRs	On or After February 24, 2011	7	6.07	37.63	34.31	14,794

Unless otherwise indicated, all references to TSARs collectively refer to both the Cenovus issued TSARs and Cenovus Replacement TSARs.

Cenovus Energy Inc. 20 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

NSRs

The weighted average unit fair value of NSRs granted during the nine months ended September 30, 2012 was $7.68 before considering forfeitures. The fair value of each NSR was estimated on their grant date using the Black-Scholes-Merton valuation model with weighted average assumptions as follows:

Risk Free Interest Rate	1.37	%
Expected Dividend Yield	2.31	%
Expected Volatility 1	28.64	%
Expected Life (Years)	4.55

1. Expected volatility has been based on historical share volatility of the Company and comparable industry peers.

The following tables summarize the information related to the NSRs as at September 30, 2012:

As at September 30, 2012 (thousands of units)	NSRs		Weighted Average Exercise Price ($)
Outstanding, Beginning of Year	5,809		36.95
Granted	9,245		38.06
Exercised for common shares	(3	)	35.67
Forfeited	(257	)	37.60
Outstanding, End of Period	14,794		37.63
Exercisable, End of Period	1,603		37.24

The weighted average market price of Cenovus’s common shares at the date of exercise during the nine months ended September 30, 2012 was $36.91.

	Outstanding NSRs(thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	NSRs	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price ($)
30.00 to 39.99	14,794	6.07	37.63
	14,794	6.07	37.63

	Exercisable NSRs (thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	NSRs	Weighted Average Exercise Price ($)
30.00 to 39.99	1,603	37.24
	1,603	37.24

Cenovus Energy Inc. 21 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

TSARs Held by Cenovus Employees

The Company has recorded a liability of $74 million as at September 30, 2012 (December 31, 2011 – $90 million) in the Consolidated Balance Sheets based on the fair value of each TSAR held by Cenovus employees. Fair value was estimated as at September 30, 2012 using the Black-Scholes-Merton valuation model with weighted average assumptions as follows:

Risk Free Interest Rate	1.27	%
Expected Dividend Yield	2.53	%
Expected Volatility 1	28.41	%
Cenovus’s Common Share Price	$34.31

1. Expected volatility has been based on historical share volatility of the Company and comparable industry peers.

The intrinsic value of vested TSARs held by Cenovus employees as at September 30, 2012 was $54 million (December 31, 2011 – $43 million).

The following tables summarize the information related to the TSARs held by Cenovus employees as at   September 30, 2012:

As at September 30, 2012 (thousands of units)	TSARs		Performance TSARs		Total		Weighted Average Exercise Price ($)
Outstanding, Beginning of Year	9,391		5,530		14,921		28.12
Granted	-		-		-		-
Exercised for cash payment	(853	)	(994	)	(1,847	)	28.39
Exercised as options for common shares	(643	)	(608	)	(1,251	)	27.64
Forfeited	(115	)	(204	)	(319	)	26.77
Outstanding, End of Period	7,780		3,724		11,504		28.17
Exercisable, End of Period	5,415		3,724		9,139		28.51

The weighted average market price of Cenovus’s common shares at the date of exercise during the nine months ended September 30, 2012 was $36.89.

	Outstanding TSARs (thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	TSARs	Performance TSARs	Total	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price ($)
20.00 to 29.99	6,360	2,173	8,533	3.13	26.38
30.00 to 39.99	1,357	1,551	2,908	0.72	33.08
40.00 to 49.99	63	-	63	0.70	43.29
	7,780	3,724	11,504	2.51	28.17

Cenovus Energy Inc. 22 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

	Exercisable TSARs(thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	TSARs	Performance TSARs	Total	Weighted Average Exercise Price ($)
20.00 to 29.99	4,130	2,173	6,303	26.34
30.00 to 39.99	1,222	1,551	2,773	33.10
40.00 to 49.99	63	-	63	43.29
	5,415	3,724	9,139	28.51

The market price of Cenovus common shares as at September 30, 2012 was $34.31.

Encana Replacement TSARs Held by Cenovus Employees

Cenovus is required to reimburse Encana in respect of cash payments made by Encana to Cenovus employees when a Cenovus employee exercises an Encana Replacement TSAR for cash. No further Encana Replacement TSARs will be granted to Cenovus employees.

The Company has recorded a liability of $2 million as at September 30, 2012 (December 31, 2011 – $1 million) in the Consolidated Balance Sheets based on the fair value of each Encana Replacement TSAR held by Cenovus employees. Fair value was estimated as at September 30, 2012 using the Black-Scholes-Merton valuation model with weighted average assumptions as follows:

Risk Free Interest Rate	1.21	%
Expected Dividend Yield	3.86	%
Expected Volatility 1	30.62	%
Encana’s Common Share Price	$21.53

1. Expected volatility has been based on the historical volatility of Encana’s publicly traded shares.

The intrinsic value of vested Encana Replacement TSARs held by Cenovus employees as at September 30, 2012 was $nil (December 31, 2011 – $nil).

The following tables summarize the information related to the Encana Replacement TSARs held by Cenovus employees as at September 30, 2012:

As at September 30, 2012 (thousands of units)	TSARs		Performance TSARs		Total		Weighted Average Exercise Price ($)
Outstanding, Beginning of Year	4,281		6,130		10,411		31.97
Exercised for cash payment	-		-		-		-
Exercised as options for Encana common shares	-		-		-		-
Forfeited	(97	)	(309	)	(406	)	30.91
Expired	(957	)	(1,236	)	(2,193	)	29.70
Outstanding, End of Period	3,227		4,585		7,812		32.66
Exercisable, End of Period	3,214		4,585		7,799		32.67

Cenovus Energy Inc. 23 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

	Outstanding TSARs (thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	TSARs	Performance TSARs	Total	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price ($)
20.00 to 29.99	1,572	2,524	4,096	1.37	29.02
30.00 to 39.99	1,522	2,061	3,583	0.40	36.38
40.00 to 49.99	131	-	131	0.73	44.84
50.00 to 59.99	2	-	2	0.64	50.39
	3,227	4,585	7,812	0.91	32.66

	Exercisable TSARs (thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	TSARs	Performance TSARs	Total	Weighted Average Exercise Price ($)
20.00 to 29.99	1,567	2,524	4,091	29.02
30.00 to 39.99	1,514	2,061	3,575	36.39
40.00 to 49.99	131	-	131	44.84
50.00 to 59.99	2	-	2	50.39
	3,214	4,585	7,799	32.67

The market price of Encana common shares as at September 30, 2012 was $21.53.

Cenovus Replacement TSARs Held by Encana Employees

Encana is required to reimburse Cenovus in respect of cash payments made by Cenovus to Encana’s employees when these employees exercise a Cenovus Replacement TSAR for cash. No compensation expense is recognized and no further Cenovus Replacement TSARs will be granted to Encana employees.

The Company has recorded a liability of $46 million as at September 30, 2012 (December 31, 2011 – $83 million) in the Consolidated Balance Sheets based on the fair value of each Cenovus Replacement TSAR held by Encana employees, with an offsetting account receivable from Encana. Fair value was estimated as at September 30, 2012 using the Black-Scholes-Merton valuation model with weighted average assumptions as follows:

Risk Free Interest Rate	1.21	%
Expected Dividend Yield	2.53	%
Expected Volatility 1	28.41	%
Cenovus’s Common Share Price	$34.31

1. Expected volatility has been based on historical share volatility of the Company and comparable industry peers.

The intrinsic value of vested Cenovus Replacement TSARs held by Encana employees as at September 30, 2012 was $28 million (December 31, 2011 – $32 million).

Cenovus Energy Inc. 24 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

The following tables summarize the information related to the Cenovus Replacement TSARs held by Encana employees as at September 30, 2012:

As at September 30, 2012 (thousands of units)	TSARs		Performance TSARs		Total		Weighted Average Exercise Price ($)
Outstanding, Beginning of Year	3,935		5,751		9,686		28.96
Exercised for cash payment	(1,680	)	(2,099	)	(3,779	)	28.60
Exercised as options for common shares	(8	)	(12	)	(20	)	26.65
Forfeited	(104	)	(337	)	(441	)	27.45
Outstanding, End of Period	2,143		3,303		5,446		29.34
Exercisable, End of Period	2,135		3,303		5,438		29.35

The weighted average market price of Cenovus’s common shares at the date of exercise during the nine months ended September 30, 2012 was $36.84.

	Outstanding TSARs (thousands of units)
As at September 30, 2012 Range of Exercise Price ($)	TSARs	Performance TSARs	Total	Weighted Average Remaining Contractual Life (years)	Weighted Average Exercise Price ($)
20.00 to 29.99	1,114	1,943	3,057	1.37	26.28
30.00 to 39.99	975	1,360	2,335	0.38	33.05
40.00 to 49.99	54	-	54	0.69	42.68
	2,143	3,303	5,446	0.94	29.34
		Exercisable TSARs (thousands of units)
As at September 30, 2012 Range of Exercise Price ($)		TSARs	Performance TSARs	Total	Weighted Average Exercise Price ($)
20.00 to 29.99		1,106	1,943	3,049	26.27
30.00 to 39.99		975	1,360	2,335	33.05
40.00 to 49.99		54	-	54	42.68
		2,135	3,303	5,438	29.35

The market price of Cenovus common shares as at September 30, 2012 was $34.31.

B) Performance Share Units

Cenovus has granted Performance Share Units (“PSUs”) to certain employees under its Performance Share Unit Plan for Employees. PSUs are whole share units and entitle employees to receive, upon vesting, either a common share of Cenovus or a cash payment equal to the value of a Cenovus common share. For a portion of PSUs, the number of PSUs eligible for payment is determined over three years based on the units granted multiplied by 30 percent after year one, 30 percent after year two and 40 percent after year three. All PSUs are eligible to vest based on the Company achieving key pre-determined performance measures. PSUs vest after three years.

The Company has recorded a liability of $109 million as at September 30, 2012 (December 31, 2011 – $55 million) in the Consolidated Balance Sheets for PSUs based on the market value of the Cenovus common shares as at September 30, 2012. The intrinsic value of vested PSUs was $nil as at September 30, 2012 and December 31, 2011 as PSUs are paid out upon vesting.

Cenovus Energy Inc. 25 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

The following table summarizes the information related to the PSUs held by Cenovus employees as at September 30, 2012:

As at September 30, 2012
(thousands of units)	PSUs
Outstanding, Beginning of Year	2,623
Granted	2,699
Cancelled	(132	)
Units in Lieu of Dividends	81
Outstanding, End of Period	5,271

C) Deferred Share Units

Under two Deferred Share Unit Plans, Cenovus directors, officers and employees may receive Deferred Share Units (“DSUs”), which are equivalent in value to a common share of the Company. Employees have the option to convert either zero, 25 or 50 percent of their annual bonus award into DSUs. DSUs vest immediately, are redeemed in accordance with the terms of the agreement and expire on December 15 of the calendar year following the year of cessation of directorship or employment.

The Company has recorded a liability of $37 million as at September 30, 2012 (December 31, 2011 – $35 million) in the Consolidated Balance Sheets for DSUs based on the market value of the Cenovus common shares as at September 30, 2012. The intrinsic value of vested DSUs equals the carrying value as DSUs vest at the time of grant.

The following table summarizes the information related to the DSUs held by Cenovus directors, officers and employees as at September 30, 2012:

As at September 30, 2012
(thousands of units)	DSUs
Outstanding, Beginning of Year	1,042
Granted to Directors	63
Granted from Annual Bonus Awards	22
Units in Lieu of Dividends	22
Exercised	(73	)
Outstanding, End of Period	1,076

D) Total Stock-Based Compensation Expense (Recovery)

The following table summarizes the stock-based compensation expense (recovery) recorded for all plans within operating and general and administrative expenses on the Consolidated Statements of Earnings and Comprehensive Income:

	Three Months Ended			Nine Months Ended
For the period ended September 30,	2012	2011		2012	2011
NSRs	9	3		22	11
TSARs held by Cenovus employees	4	(25	)	-	11
Encana Replacement TSARs held by Cenovus employees	-	(11	)	1	(7	)
PSUs	18	3		39	19
DSUs	2	(4	)	4	2
	33	(34	)	66	36

Cenovus Energy Inc. 26 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

16. INTEREST IN JOINT OPERATIONS

Cenovus has a 50 percent interest in FCCL Partnership, a jointly controlled entity which is involved in the development and production of crude oil. In addition, through its interest in the general partner and a limited partner, Cenovus has a 50 percent interest in WRB Refining LP, a jointly controlled entity, which owns two refineries in the U.S. and focuses on the refining of crude oil into petroleum and chemical products.

These entities have been accounted for using the proportionate consolidation method with the results of operations included in the Oil Sands and Refining and Marketing segments, respectively. Summarized financial statement information for these jointly controlled entities is as follows:

	FCCL Partnership 1			WRB Refining LP 1
Consolidated Statements of Earnings For the three months ended September 30,	2012	2011		2012	2011
Revenues	748	515		2,456	2,221
Expenses
Purchased product	-	-		1,801	1,896
Operating, transportation and blending and realized (gain)/loss on risk management	458	304		121	92
Operating Cash Flow	290	211		534	233
Depreciation, depletion and amortization	79	55		33	20
Other expenses (income)	57	(210	)	11	(13	)
Net Earnings (Loss)	154	366		490	226

1. FCCL Partnership and WRB Refining LP are not separate tax paying entities. Income taxes related to the Partnerships’ income are the responsibility of their respective Partners.

	FCCL Partnership 1			WRB Refining LP 1
Consolidated Statements of Earnings For the nine months ended September 30,	2012	2011		2012	2011
Revenues	2,285	1,662		7,368	6,293
Expenses
Purchased product	-	-		5,869	5,229
Operating, transportation and blending and realized (gain)/loss on risk management	1,425	991		350	329
Operating Cash Flow	860	671		1,149	735
Depreciation, depletion and amortization	217	145		100	54
Other expenses (income)	33	(179	)	7	(14	)
Net Earnings (Loss)	610	705		1,042	695

1. FCCL Partnership and WRB Refining LP are not separate tax paying entities. Income taxes related to the Partnerships’ income are the responsibility of their respective Partners.

	FCCL Partnership		WRB Refining LP
Consolidated Balance Sheets As at	September 30, 2012	December 31, 2011	September 30, 2012	December 31, 2011
Cash and Cash Equivalents	352	145	200	166
Other Current Assets	782	792	1,266	1,236
Long-term Assets	7,321	6,864	3,043	3,188
Current Liabilities	420	317	584	759
Long-term Liabilities	105	83	70	73

Cenovus Energy Inc. 27 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

17. CAPITAL STRUCTURE

Cenovus’s capital structure objectives and targets have remained unchanged from previous periods. Cenovus’s capital structure consists of Shareholders’ Equity plus Debt. Debt includes the Company’s short-term borrowings plus long-term debt, including the current portion. Cenovus’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.

Cenovus monitors its capital structure financing requirements using, among other things, non-GAAP financial metrics consisting of Debt to Capitalization and Debt to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”). These metrics are used to steward Cenovus’s overall debt position as measures of Cenovus’s overall financial strength. Debt is defined as short-term borrowings and the current and long-term portions of long-term debt excluding any amounts with respect to the Partnership Contribution Payable or Receivable.

Cenovus continues to target a Debt to Capitalization ratio of between 30 and 40 percent over the long-term.

As at	September 30, 2012	December 31, 2011
Long-Term Debt	4,626	3,527
Debt	4,626	3,527
Shareholders’ Equity	10,064	9,406
Total Capitalization	14,690	12,933
Debt to Capitalization	31%	27%

Cenovus continues to target a Debt to Adjusted EBITDA of between 1.0 and 2.0 times over the long-term.

As at	September 30, 2012		December 31, 2011
Debt	4,626		3,527
Net Earnings	1,377		1,478
Add (deduct):
Finance costs	456		447
Interest income	(114	)	(124	)
Income tax expense	680		729
Depreciation, depletion and amortization	1,559		1,295
Exploration expense	68		-
Unrealized (gain) loss on risk management	302		(180	)
Foreign exchange (gain) loss, net	(72	)	26
(Gain) loss on divestiture of assets	(104	)	(107	)
Other (income) loss, net	(1	)	4
Adjusted EBITDA 1	4,151		3,568
Debt to Adjusted EBITDA	1.1x		1.0x

1. Calculated on a trailing twelve-month basis.

It is Cenovus’s intention to maintain investment grade credit ratings to help ensure it has continuous access to capital and the financial flexibility to fund its capital programs, meet its financial obligations and finance potential acquisitions. Cenovus will maintain a high level of capital discipline and manage its capital structure to ensure sufficient liquidity through all stages of the economic cycle. To manage the capital structure, Cenovus may adjust capital and operating spending, adjust dividends paid to shareholders, purchase shares for cancellation pursuant to normal course issuer bids, issue new shares, issue new debt, draw down on its credit facilities or repay existing debt.

As at September 30, 2012, Cenovus is in compliance with all of the terms of its debt agreements.

Cenovus Energy Inc. 28 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

18. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Cenovus’s consolidated financial assets and financial liabilities consist of cash and cash equivalents, accounts receivable and accrued revenues, accounts payable and accrued liabilities, Partnership Contribution Receivable and Payable, partner loans, risk management assets and liabilities, long-term receivables, short-term borrowings, long-term debt and obligations for stock-based compensation carried at fair value. Risk management assets and liabilities arise from the use of derivative financial instruments. Fair values of financial assets and liabilities, summarized information related to risk management positions, and discussion of risks associated with financial assets and liabilities are presented as follows.

A) Fair Value of Financial Assets and Liabilities

The fair values of cash and cash equivalents, accounts receivable and accrued revenues, accounts payable and accrued liabilities, and short-term borrowings approximate their carrying amount due to the short-term maturity of those instruments.

The fair values of the Partnership Contribution Receivable and Partnership Contribution Payable, partner loans and long-term receivables approximate their carrying amount due to the specific non-tradeable nature of these instruments.

Risk management assets and liabilities are recorded at their estimated fair value based on mark-to-market accounting, using quoted market prices or, in their absence, third-party market indications and forecasts.

Long-term debt is carried at amortized cost. The estimated fair values of long-term borrowings have been determined based on prices sourced from market data. As at September 30, 2012, the carrying value of Cenovus’s long-term debt accounted for using amortized cost was $4,626 million and the fair value was $5,537 million (December 31, 2011 carrying value – $3,527, fair value – $4,316).

B) Risk Management Assets and Liabilities

Net Risk Management Position

As at	September 30, 2012	December 31, 2011
Risk Management Assets
Current asset	163	232
Long-term asset	31	52
	194	284
Risk Management Liabilities
Current liability	39	54
Long-term liability	4	14
	43	68
Net Risk Management Asset (Liability)	151	216

Summary of Unrealized Risk Management Positions

	September 30, 2012			December 31, 2011
	Risk Management			Risk Management
As at	Asset	Liability	Net	Asset	Liability	Net
Commodity Prices
Crude Oil	97	41	56	22	65	(43	)
Natural Gas	96	1	95	247	3	244
Power	1	1	-	15	-	15
Total Fair Value	194	43	151	284	68	216

Cenovus Energy Inc. 29 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

Net Fair Value Methodologies Used to Calculate Unrealized Risk Management Positions

As at	September 30, 2012		December 31, 2011
Prices actively quoted	178		226
Prices sourced from observable data or market corroboration	(27	)	(10	)
Total Fair Value	151		216

Prices actively quoted refers to the fair value of contracts valued using quoted prices in an active market. Prices sourced from observable data or market corroboration refers to the fair value of contracts valued in part using active quotes and in part using observable, market-corroborated data.

Net Fair Value of Commodity Price Positions

As at September 30, 2012	Notional Volumes	Term	Average Price	Fair Value
Crude Oil Contracts
Fixed Price Contracts
WTI NYMEX Fixed Price	24,800 bbls/d	2012	US$98.72/bbl	14
WTI NYMEX Fixed Price	24,500 bbls/d	2012	$99.47/bbl	18
Brent Fixed Price 1	18,500 bbls/d	2013	US$110.36/bbl	22
Brent Fixed Price 1	18,500 bbls/d	2013	$111.72/bbl	38
Other Fixed Price Contracts 2		2012-2014		(27	)
Other Financial Positions 3				(9	)
Crude Oil Fair Value Position				56
Natural Gas Contracts
Fixed Price Contracts
NYMEX Fixed Price	130 MMcf/d	2012	US$5.96/Mcf	31
AECO Fixed Price 2	127 MMcf/d	2012	$4.50/Mcf	18
NYMEX Fixed Price	166 MMcf/d	2013	US$4.64/Mcf	48
Other Fixed Price Contracts 2		2012-2013		(2	)
Natural Gas Fair Value Position				95
Power Purchase Contracts
Power Fair Value Position				-

1. Brent fixed price positions consist of both Brent fixed price swaps and WTI swaps converted to Brent.

2. Cenovus has entered into fixed price swaps to protect against widening price differentials between production areas in Canada, various sales points and quality differentials.

3. Other financial positions are part of ongoing operations to market the Company’s production.

Earnings Impact of Realized and Unrealized Gains (Losses) on Risk Management Positions

	Three Months Ended			Nine Months Ended
For the period ended September 30,	2012		2011	2012		2011
REALIZED GAIN (LOSS) 1
Crude Oil	26		8	26		(96	)
Natural Gas	65		46	200		143
Refining	6		16	18		3
Power	2		9	-		6
	99		79	244		56
UNREALIZED GAIN (LOSS) 2
Crude Oil	(189	)	353	102		418
Natural Gas	(83	)	11	(144	)	(38	)
Refining	(11	)	15	(3	)	16
Power	(10	)	2	(15	)	26
	(293	)	381	(60	)	422
Gain (Loss) on Risk Management	(194	)	460	184		478

1. Realized gains and losses on risk management are recorded in the operating segment to which the derivative instrument relates.

2. Unrealized gains and losses on risk management are recorded in the Corporate and Eliminations segment.

Cenovus Energy Inc. 30 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

Reconciliation of Unrealized Risk Management Positions

	2012				2011
For the period ended September 30,	Fair Value		Total Unrealized Gain (Loss)		Total Unrealized Gain (Loss)
Fair Value of Contracts, Beginning of Year	216
Change in fair value of contracts in place at beginning of year and contracts entered into during the period	184		184		478
Unrealized foreign exchange gain (loss) on U.S. dollar contracts	(5	)	-		-
Fair value of contracts realized during the period	(244	)	(244	)	(56	)
Fair Value of Contracts, End of Period	151		(60	)	422

Commodity Price Sensitivities - Risk Management Positions

The following table summarizes the sensitivity of the fair value of Cenovus’s risk management positions to fluctuations in commodity prices, with all other variables held constant. Management believes the price fluctuations identified in the table below are a reasonable measure of volatility. Fluctuations in commodity prices could have resulted in unrealized gains (losses) impacting earnings before income tax on open risk management positions as at September 30, 2012 as follows:

Commodity	Sensitivity Range	Increase		Decrease
Crude oil commodity price	± US$10 per bbl applied to Brent & WTI hedges	(205	)	205
Crude oil differential price	± US$5 per bbl applied to differential hedges tied to production	112		(112	)
Natural gas commodity price	± $1 per mcf applied to NYMEX and AECO natural gas hedges	(84	)	84
Natural gas basis price	± $0.10 per mcf natural gas basis hedges	1		(1	)
Power commodity price	± $25 per MWHr applied to power hedge	19		(19	)

C) Risks Associated with Financial Assets and Liabilities

Commodity Price Risk

Commodity price risk arises from the effect that fluctuations of future commodity prices may have on the fair value or future cash flows of financial assets and liabilities. To partially mitigate exposure to commodity price risk, the Company has entered into various financial derivative instruments. The use of these derivative instruments is governed under formal policies and is subject to limits established by the Board of Directors. The Company’s policy is not to use derivative instruments for speculative purposes.

Crude Oil – The Company has used fixed price swaps to partially mitigate its exposure to the commodity price risk on its crude oil sales and condensate supply used for blending. To help protect against widening crude oil price differentials, Cenovus has entered into a limited number of swaps and futures to manage the price differentials.

Natural Gas – To partially mitigate the natural gas commodity price risk, the Company has entered into swaps, which fix the NYMEX and AECO prices. To help protect against widening natural gas price differentials in various production areas, Cenovus has entered into a limited number of swaps to manage the price differentials between these production areas and various sales points.

Power – The Company has in place a Canadian dollar denominated derivative contract, which commenced January 1, 2007 for a period of 11 years, to manage a portion of its electricity consumption costs.

Cenovus Energy Inc. 31 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

Credit Risk

Credit risk arises from the potential that the Company may incur a loss if a counterparty to a financial instrument fails to meet its obligation in accordance with agreed terms. This credit risk exposure is mitigated through the use of Board-approved credit policies governing the Company’s credit portfolio and with credit practices that limit transactions according to counterparties’ credit quality. Agreements are entered into with major financial institutions with investment grade credit ratings and with counterparties, most of which have investment grade credit ratings. A substantial portion of Cenovus’s accounts receivable are with customers in the oil and gas industry and are subject to normal industry credit risks. As at September 30, 2012, 92 percent (December 31, 2011 – over 92 percent) of Cenovus’s accounts receivable and financial derivative credit exposures are with investment grade counterparties.

As at September 30, 2012, Cenovus had two counterparties whose net settlement position individually account for more than 10 percent (December 31, 2011 – two counterparties) of the fair value of the outstanding in-the-money net financial and physical contracts by counterparty. The maximum credit risk exposure associated with accounts receivable and accrued revenues, risk management assets, Partnership Contribution Receivable, partner loans receivable, and long-term receivables is the total carrying value. The current concentration of this credit risk resides with A rated or higher counterparties. Cenovus’s exposure to its counterparties is acceptable and within credit policy tolerances.

Liquidity Risk

Liquidity risk is the risk that Cenovus will not be able to meet all of its financial obligations as they become due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. Cenovus manages its liquidity risk through the active management of cash and debt and by maintaining appropriate access to credit. As disclosed in Note 17, over the long term, Cenovus targets a Debt to Capitalization ratio between 30 and 40 percent and a Debt to Adjusted EBITDA of between 1.0 to 2.0 times to manage the Company’s overall debt position. It is Cenovus’s intention to maintain investment grade credit ratings on its senior unsecured debt.

Cenovus manages its liquidity risk by ensuring that it has access to multiple sources of capital including: cash and cash equivalents, cash from operating activities, undrawn credit facilities, commercial paper and availability under its shelf prospectuses. As at September 30, 2012, Cenovus had $3.0 billion available on its committed credit facility. In addition, Cenovus had in place a Canadian debt shelf prospectus for $1.5 billion and unused capacity of US$750 million under a U.S. debt shelf prospectus, the availability of which are dependent on market conditions.

Undiscounted cash outflows relating to financial liabilities are outlined in the table below:

	Less than 1 Year	1-3 Years	4-5 Years	Thereafter	Total
Accounts Payable and Accrued Liabilities	2,760	-	-	-	2,760
Risk Management Liabilities	39	4	-	-	43
Long-Term Debt 1	251	1,249	427	7,054	8,981
Partnership Contribution Payable 1	481	962	721	-	2,164
Other 1	-	9	4	4	17

1.  Principal and interest, including current portion, if any.

Foreign Exchange Risk

Foreign exchange risk arises from changes in foreign exchange rates that may affect the fair value of future cash flows of Cenovus’s financial assets or liabilities. As Cenovus operates in North America, fluctuations in the exchange rate between the U.S./Canadian dollars can have a significant effect on reported results.

As disclosed in Note 5, Cenovus’s foreign exchange (gain) loss primarily includes unrealized foreign exchange gains and losses on the translation of the U.S. dollar debt issued from Canada and the translation of the U.S. dollar Partnership Contribution Receivable issued from Canada. As at September 30, 2012, Cenovus had US$4,750 million in U.S. dollar debt issued from Canada (US$3,500 million as at December 31, 2011) and US$1,884 million related to the U.S. dollar Partnership Contribution Receivable (US$2,157 million as at December 31, 2011). A $0.01 change in the U.S. to Canadian dollar exchange rate would have resulted in a $29 million change in foreign exchange (gain) loss as at September 30, 2012 (September 30, 2011 – $13 million).

Cenovus Energy Inc. 32 For the period ended September 30, 2012

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

All amounts in $ millions, unless otherwise indicated

For the period ended September 30, 2012

Interest Rate Risk

Interest rate risk arises from changes in market interest rates that may affect earnings, cash flows and valuations. Cenovus has the flexibility to partially mitigate its exposure to interest rate changes by maintaining a mix of both fixed and floating rate debt.

As at September 30, 2012, the increase or decrease in net earnings for a one percentage point change in interest rates on floating rate debt amounts to $nil (September 30, 2011 – $nil). This assumes the amount of fixed and floating debt remains unchanged from the respective balance sheet dates.

19. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

Cenovus is involved in a limited number of legal claims associated with the normal course of operations. Cenovus believes it has made adequate provisions for such legal claims. There are no individually or collectively significant claims.

Cenovus Energy Inc. 33 For the period ended September 30, 2012