CALGARY, Alberta (Reuters) - Synenco Energy Inc plans to chop up to 70 percent of its staff as the oil sands start-up seeks to bolster a lengthy sale process under a new chief executive, the company said on Thursday.
Synenco, which is struggling to develop the Northern Lights oil sands project along with partner Sinopec, the Chinese refiner, plans to lay off 60 to 70 of its 100 employees by the end of this year, it said.
It said the move “reflects the narrower focus of company activities.”
Those include advancing the northern Alberta project’s regulatory application, completing a resource analysis following this year’s drilling and “reinvigorating” the company’s search for a buyer or merger partner, it said.
Synenco said last month that Todd Newton had resigned as chief executive and that its board had taken over control of the sale process, which has dragged for most of the past year.
Board chairman Mike Supple has taken the role of CEO.
The company put itself on the block in May 2007 after the cost estimate for the Northern Lights oil sands mine and upgrader ballooned to C$10.7 billion ($10.9 billion), more than double a 2005 estimate.
Severance costs for the job cuts are expected to be C$5 million, and the company’s 2008 capital expenditures are now budgeted at C$40 million, down from C$50 million, it said.
Synenco shares were up 5 Canadian cents at C$6.78 on the Toronto Stock Exchange on Thursday morning, down from a 52-week high of C$16.75.
The company also said its 2007 net loss totaled C$15 million, or 30 Canadian cents a share, down from a year-earlier profit if C$3.9 million, or 7 Canadian cents a share.
The loss includes a C$35.5 million impairment charge for the Northern Lights upgrader engineering and development costs.
Reporting by Jeffrey Jones; Editing by Peter Galloway