Cenovus Energy Inc (CVE.TO) reported a surprise quarterly profit as production rose and costs fell.

Oil and gas companies, battered by a two-year slump in oil prices, have sharply cut costs and are also benefiting from a sharp drop in prices for oilfield services.

Cenovus Energy, which has laid off nearly a third of its workforce since 2014-end, said its oil sands operating costs fell 12 per cent in 2016, while operating costs for its conventional oil assets fell 10 per cent.

The Calgary, Alberta-based company's total crude oil production rose about 10 per cent to 219,551 barrels per day in the fourth quarter.

The company said expansions at its Christina Lake and Foster Creek projects in northern Alberta increased its total oil sands production capacity by 26 per cent to an average of 390,000 barrels per day in the quarter.

Cenovus also said the chairman of its board, Michael Grandin, would retire after the company's annual meeting on April 26. Grandin will be succeeded by Patrick Daniel.

The company reported net earnings of $91 million, or 11 cents per share, in the three months ended Dec. 31, compared with a loss of $641 million, or 77 cents per share, a year earlier.

Up to Wednesday's close of $17.97, the company's shares had risen 23.9 per cent over the past 12 months on the Toronto Stock Exchange.