CALGARY, Alberta (Reuters) - Canadian oil producer Cenovus Energy Inc CVE.TO posted a bigger-than-expected quarterly loss and announced a fresh round of cuts to its quarterly dividend, 2016 capital budget and workforce on Thursday in response to an incessant fall in oil prices.
The Calgary-based company has been grappling with a more than 70 percent fall in crude since June 2014, and said it would lower spending at its Foster Creek and Christina Lake oil sands projects in Alberta, which are joint ventures with ConocoPhillips COP.N.
Alberta’s vast oil sand deposits are the world’s third-largest crude reserves, but are more expensive to operate in than conventional oil fields.
“We had a stiff headwind in 2015, which in 2016 has gone to hurricane force,” chief executive Brian Ferguson said on an earnings call, adding that capital discipline and balance sheet strength would be top priorities. “This is not a time for half measures.”
Cenovus cut its 2016 capital spending for the second time, this time by C$200-C$300 million to C$1.2-C$1.3 billion, and plans to reduce spending on emerging oil sands assets and its conventional oil business.
However, the company said the planned capital spending reductions would have “minimal impact” on oil sands production, which should stay within its previous forecast of 144,000-157,000 barrels per day on a net basis.
Cenovus sold its oil and gas royalty properties to Ontario Teachers’ Pension Plan for about C$3.3 billion last year to strengthen its balance sheet and create flexibility to invest in growth projects.
Ferguson said the company has an ongoing asset divestiture program and plans to sell some non-core conventional assets once the market is more stable.
Cenovus also plans to further reduce its workforce, on top of last year’s 24 percent reduction, but did not specify how many employees would be affected by the latest cuts.
The company, which cut its dividend by 40 percent in 2015, said it would slash its current-quarter dividend by 69 percent to 5 Canadian cents per share.
It also plans to cut operating, general and administrative costs, including for its workforce, by C$200 million.
Cenovus’s net loss widened to C$641 million ($458.4 million), or 77 Canadian cents per share, in the fourth quarter ended Dec. 31, from C$472 million, or 62 Canadian cents per share, a year earlier.
Analyst on average were expecting a loss of 20 Canadian cents per share, according to Thomson Reuters I/B/E/S.
Shares were last up 1.6 percent on the Toronto Stock Exchange at C$13.75.
Additional reporting by Swetha Gopinath in Bengaluru; Editing by Savio D'Souza, Diane Craft