Cenovus cuts spending by another 20%, plans to shed more jobs

Cenovus Energy Inc., Calgary, has reduced its planned capital spending for 2016 by an additional 20% to $1.2-1.3 billion (Can.), down 27% from that of 2015 and 59% from that of 2014. The firm outlined its initial 2016 budget in December (OGJ Online, Dec. 10, 2015).

As part of the measure, Cenovus plans to further reduce its workforce during the year after cutting 24% in 2015 compared with its 2014 level.

Separately, Kieron McFadyen will join the company on Apr. 6 as executive vice-president and president, upstream oil and gas. He will be responsible for all of Cenovus’s oil sands and conventional operations.

Planned capital budget reductions for 2016 include lower spending at Cenovus’s Foster Creek and Christina Lake oil sands projects, its emerging oil sands assets, and the company’s conventional oil business.

However, the reductions are expected to have minimal impact on the company’s oil sands production for 2016, which is forecast to remain within guidance, at between 144,000-157,000 b/d net.

Cenovus also says it sees further opportunities to cut operating expenses by prioritizing repairs and maintenance and cancelling or deferring nonessential work, including the deferral of a scheduled turnaround at Foster Creek until 2017.

Cenovus posted a net loss in 2015 of $641 million (Can.), compared with a loss of $472 million in 2014. Over the past 2 years, the firm has recorded inventory write-downs and asset impairments totaling $1.18 billion.

In 2015, companywide oil production totaled 206,947 b/d, up 2% from that of a year earlier; and natural gas production was 441 MMcfd, down 10% year-over-year. In 2016, liquids output is expected at 196,000-213,000 boe/d, with total upstream output at 258,000-280,000 boe/d.

At yearend 2015, Cenovus had total proved reserves of 2.5 billion boe, an increase of 7% compared with the 2014 total.

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