(Reuters) - Cenovus Energy Inc (CVE.TO) has achieved 700 job cuts for the second half of 2015, double the number it forecast in July, the Canadian oil producer said on Thursday.
Its shares jumped after the announcement.
Cenovus said it expected to end the year with about 4,000 employees, including contractors, down about a quarter from a year earlier. The company estimated that these reductions would generate savings of at least C$100 million ($76 million) annually from next year.
Cenovus shares were up 2.4 percent at C$19.70 in afternoon trading in Toronto. The company also raised its 2015 cost-savings target to C$400 million from the C$280 million it forecast in July.
Job cuts will result in additional severance costs of about C$32 million in the current quarter, the company said. Cenovus, which previously announced additional staff reductions in 2016, said it would achieve additional savings by changing some compensation, benefits and time-off practices.
Chief Executive Officer Brian Ferguson said Cenvous wants its major projects to adopt a “manufacturing mindset” as it anticipates adding 35 per cent to its oil sands productive capacity in 2016.
“They’re very large operations, lending themselves to economies of scale,” he said in an inteview.
Cenovus, which has cut capital spending in recent months, reported a third-quarter operating loss of C$28 million, or 3 Canadian cents per share.
Analysts on average had expected a loss of 4 Canadian cents per share, according to Thomson Reuters I/B/E/S.
The company said about a third of the new cost savings would come from lower capital spending.
Cenovus has forecast 2015 capital spending of C$1.8 billion-C$1.9 billion, about 40 percent below the 2014 level.
Cenovus said in June it had agreed to sell its portfolio of oil and gas royalty properties to the Ontario Teachers’ Pension Plan for about C$3.3 billion to strengthen its balance sheet and create flexibility to invest in growth projects.
The company recorded a gain of C$1.9 billion from the sale, helping its net profit increase five-fold to C$1.80 billion, or C$2.16 per share, in the quarter ended Sept. 30.
Oil production in the quarter rose 6 percent to average 210,422 barrels per day.
Cenovus said expansions at Christina Lake and Foster Creek in Alberta, joint ventures with ConocoPhillips (COP.N), are expected to complete in 2016 and would add about 100,000 bpd of production capacity.
Reporting by Nia Williams and Mike De Souza in Calgary and Amrutha Gayathri in Bengaluru; Editing by Savio D'Souza and David Gregorio