Oil producer Cenovus Energy Inc posted a bigger-than-expected quarterly loss and announced a fresh round of cuts to the quarterly dividend, 2016 capital budget and workforce, because it attempts 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 percent 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 are more expensive to function in than conventional oil fields.
“Capital discipline and balance sheet strength will remain our top priorities in this extremely challenging oil price environment,” Chief Executive Brian Ferguson said inside a statement on Thursday.
Cenovus cut its 2016 capital spending for that second time, this time around by $200-$300 million to $1.2-$1.3 billion, and said hello also plans to reduce paying for its emerging oil sands assets and its conventional oil business.
However, the organization said the planned capital spending reductions might have “minimal impact” on its oilsands production, which it expects to remain within its previous forecast of 144,000-157,000 barrels each day on the net basis.
Cenovus sold its oil and gas royalty properties to Ontario Teachers’ Pension Plan for about $3.3 billion last year to strengthen its balance sheet and make 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 would be affected in the latest round of job cuts.
Cenovus, which in fact had cut its dividend by 40 percent in 2015, said it would slash its current-quarter dividend by 69 per cent to 5 Canadian cents per share.
The company also intends 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, in the fourth quarter ended Dec. 31, from $472 million, or 62 cents per share, a year earlier.
Operating loss, which excludes most one-time items, fell by more than a quarter to $438 million, or 53 Canadian cents per share.
Analyst on average were expecting a loss of 20 Canadian cents per share, based on Thomson Reuters I/B/E/S.
? Thomson Reuters 2016
