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Cenovus signals more job cuts as 'hurricane force' headwinds hit industry

Pictured Cenovus Energy's Christina Lake operations in northern Alberta.
Image Credit: Contributed/CNW Group/Cenovus Energy Inc.
February 11, 2016 - 1:00 PM

CALGARY - Cenovus Energy Inc. is planning more layoffs this year as part of an effort to cut $400 million to $500 million in costs while it rides out a rough period of low oil and gas prices.

"We had a stiff headwind in 2015 which, in 2016, has gone to hurricane force," chief executive Brian Ferguson said during an investor conference call Thursday.

Oil prices have nosedived this year, pushing to lows not seen since 2003 as oil hovers below US$27 a barrel.

"My key message today is that we will not sacrifice our financial resilience. This is not a time for half-measures," said Ferguson.

Cenovus is aiming to cut operating and administrative costs by $200 million, in part through unspecified workforce cuts and lower cash compensation for its five highest-paid executives.

Ferguson said Cenovus has not yet determined the scale of the job cuts, but he doesn't expect them to be nearly as big as last year's cutbacks that resulted in layoffs for 1,500 staff or about 24 per cent of its workforce.

The company's revised capital budget has also been lowered to between $1.2 billion and $1.3 billion, which is down $200 million to $300 million from the budget it outlined in December. It's also 27 per cent less than 2015 and 59 per cent lower than in 2014.

Ferguson said that the company will continue to defer some oilsands projects until it gets a clearer picture from the federal government on environmental and energy regulations.

"While we now have more regulatory and fiscal certainty in Alberta, we need that same certainty from Ottawa before we will resume construction of deferred oilsands projects," he said.

The Calgary-based oilsands producer and refiner is also reducing its first-quarter dividend by 69 per cent to five cents per share, a move Ferguson said was necessary due to the volatile times.

"This is clearly a big decision and, in this volatile commodity price environment, we feel it is a critical step to help maintain financial resilience."

Cenovus had a net loss of $641 million or 77 cents per share in the fourth quarter — dragging down the full-year profit to $618 million or 75 cents per share.

In the comparable period of 2014, the company's fourth-quarter loss was $472 million or 62 cents per share and its full-year profit was $744 million or 98 cents per share.

News from © The Canadian Press, 2016
The Canadian Press

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