Cenovus Energy Inc. announced it will suspend hedging against West Texas Intermediate crude and warned of losses ahead on its existing risk-management strategy.

The Calgary-based oil sands producer said in a release it's expecting to book a loss of about $970 million on its hedges in the first quarter, and it estimated an additional $410 million in losses in the second quarter.

"Given the strength of Cenovus’s balance sheet and liquidity position, the company has determined these programs are no longer required to support financial resilience. Cenovus will remain well positioned to generate significant free funds flow over the long term," it said in a release Monday.

Oil producers often lock in hedges to protect themselves against volatile prices. According to year-end documents, Cenovus booked $892 million in realized losses on its risk management activities in 2021.

Cenovus said the bulk of its WTI hedges are expected to be closed out in the next two months.