Cenovus to cut jobs, freeze hikes as losses deepen on oil price tumble

Thu Feb 12, 2015 6:53am EST
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(Reuters) - Cenovus Energy Inc (CVE.TO: Quote), Canada's second-largest independent oil producer, reported a quarterly loss that ballooned eight times and said it would cut 15 percent jobs, freeze salary hikes and cut discretionary spending as it adjusts to the slump in global crude prices.

Cenovus has already slashed its 2015 capital budget twice, which is expected to delay development of some of its tar sands properties, and on Thursday said further cuts were possible if oil prices continue to fall or remain low for an extended period.

The company joins a host of Canadian and U.S. oil and gas producers in scaling back spending plans as crude oil prices LCOc1 have more than halved since peaking in June last year.

Analysts have also cut their forecasts for average oil prices in 2015 and 2016, citing global growth concerns, a strengthening dollar and ample supply.

"With low oil prices expected to persist through 2015, we plan to continue building our production capacity, but at a slower pace," Chief Executive Brian Ferguson said in a statement.

Ferguson said Cenovus would focus on its Foster Creek and Christina Lake project, which it co-owns with ConocoPhillips (COP.N: Quote).

Calgary, Alberta-based Cenovus said most of the job cuts would come from the its contract workforce. It was not immediately clear how many full-time and contract employees the company employed.

The company's net loss ballooned to C$472 million ($375.65 million), or 62 Canadian cents per share, in the fourth quarter ended Dec. 31, from C$58 million, or 8 Canadian cents per share, a year earlier.

On an operating basis, which excludes most one-time items, the company reported a loss of C$590 million, or 78 Canadian cents per share, compared with a profit of C$212 million, or 28 Canadian cents per share.   Continued...

Brian Ferguson, president and CEO of Cenovus, addresses shareholders at the company's annual general meeting in Calgary, Alberta, April 25, 2012. REUTERS/Todd Korol