(Reuters) - Cenovus Energy Inc (CVE.TO), Canada’s No. 2 independent oil producer, on Thursday slashed its quarterly dividend by 40 percent and said it would cut 300 to 400 jobs to further reduce costs because of slumping crude prices.
The Calgary-based company said it now expects to prune its workforce of 4,600 by about 15 percent by the end of this year and cut more jobs in early 2016.
Cenovus also raised its cost reduction target for 2015 by 40 percent to C$280 million ($215 million) and reiterated plans to take a more disciplined approach to growth in light of low crude prices.
“I’m now of the opinion that we could well experience pretty low and volatile prices through 2017,” Chief Executive Brian Ferguson told analysts on a conference call.
Ferguson added that if U.S. crude stays in the $50 to $55 per barrel range, the company would still be able to fund expansion of its Foster Creek and Christina Lake oil sand projects in northern Alberta.
Oil prices LCOc1 CLc1 have plunged roughly 55 percent in the past year, forcing many Canadian producers to cut jobs and slash costs.
Cenovus produces oil at Christina Lake and Foster Creek, both of which are joint ventures with ConocoPhillips (COP.N), and at other assets. It also has a 50 percent stake in two U.S. refineries.
The company said its focus for 2015 is on sustaining its existing output and completing expansion projects already under way.
It will wait until 2016 to consider expansion projects deferred earlier this year, with investment decisions dependent on oil price stability, balance sheet strength and other factors.
Cash flow, a measure of Cenovus’s ability to fund new projects, dropped 60 percent to C$477 million in the second quarter.
Net income fell to C$126 million, or 15 Canadian cents per share, from C$615 million, or 81 Canadian cents per share, a year earlier.
Operating profit fell 68.1 percent to C$151 million, or 18 Canadian cents per share, but beat the average analyst estimate of 9 Canadian cents per share, according to Thomson Reuters I/B/E/S.
The company reduced its quarterly dividend to 16 Canadian cents per share from 26.62 Canadian cents.
Cenovus shares were trading up 1.7 percent at C$18.92 Thursday afternoon on the Toronto Stock Exchange.
Reporting by Julie Gordon in Vancouver and Darshana Sankararaman in Bengaluru; Editing by Anil D'Silva, Kirti Pandey and Steve Orlofsky