Cenovus Energy Inc slashes dividend, cuts spending and jobs as loss deepens more than expected

Oil producer Cenovus Energy Inc posted a bigger-than-expected quarterly loss and announced a fresh round of cuts to its quarterly dividend, 2016 capital budget and workforce, because it tries to shore up finances amid an incessant fall in oil prices.

The Canadian company, that has been cutting costs in reaction to a more than 70 per cent fall in oil prices since June 2014, said it would lower spending at its Foster Creek and Christina Lake oil sands projects in Alberta, which its operates together with ConocoPhillips.

Alberta’s vast oilsand deposits would be the world’s third-largest crude reserves, but they are more expensive to operate in than conventional oil fields.

“Capital discipline and balance sheet strength will stay our top priorities within this extremely challenging oil price environment,” Leader Brian Ferguson said in a statement on Thursday.

Cenovus cut its 2016 capital spending for that second time, this time by $200-$300 million to $1.2-$1.3 billion, and said hello also plans to reduce spending on its emerging oil sands assets and it is conventional oil business.

However, the organization said the planned capital spending reductions would have “minimal impact” on its oilsands production, which it expects to remain within its previous forecast of 144,000-157,000 barrels per day on the net basis.

Cenovus sold its gas and oil royalty properties to Ontario Teachers’ Type of pension for about $3.3 billion last year to bolster its balance sheet and create flexibility to invest in growth projects.

The company said on Thursday it plans to further reduce its workforce, along with a 24 percent reduction this past year. It did not say the number of employees could be affected in the latest round of job cuts.

Cenovus, which in fact had cut its dividend by 40 percent in 2015, said hello would slash its current-quarter dividend by 69 percent to five Canadian cents per share.

The company also plans to cut operating, general and administrative costs, including for its workforce, by $200 million.

Cenovus’s net loss widened to $641 million, or 77 cents per share, within the fourth quarter ended Dec. 31, from $472 million, or 62 cents per share, last year.

Operating loss, which excludes most one-time items, fell by greater than a quarter to $438 million, or 53 Canadian cents per share.

Analyst typically were expecting a loss of revenue of 20 Canadian cents per share, according to Thomson Reuters I/B/E/S.
? Thomson Reuters 2016