February 12, 2016 / 12:05 PM / 3 years ago

Cenovus Energy may sell up to $5 billion in securities amid oil slump

A warning sign is pictured near wellheads that inject steam into the ground and pump oil out at the Cenovus Energy Christina Lake Steam-Assisted Gravity Drainage (SAGD) project 120 km (74 miles) south of Fort McMurray, Alberta, August 15, 2013. REUTERS/Todd Korol

(Reuters) - Canadian oil producer Cenovus Energy Inc (CVE.TO) said it may sell up to $5 billion of stock, debt or other securities, a day after it announced a dividend cut, as the company shores up its balance sheet amid a slump in oil prices.

The company filed with the U.S. Securities and Exchange Commission for a mixed shelf offering after the company also said on Thursday it would cut its 2016 budget and lay off more employees.

In a mixed shelf offering a company may sell securities in one or more separate offerings without filing a prospectus for each one. The filing does not necessarily mean that the securities will be sold immediately, if at all.

U.S. oil producers including Oasis Petroleum Inc (OAS.N) and Pioneer Natural Resources Co (PXD.N) have also launched stock offerings, indicating that some oil producers can tap the capital markets even as highly indebted ones struggle to survive.

Cenovus cut its dividend by 69 percent on Thursday and said it would further reduce its workforce, on top of last year’s 24 percent reduction.

These measures come months after the company sold its oil and gas royalty properties to Ontario Teachers’ Pension Plan for about C$3.3 billion, to strengthen its balance sheet.

Cenovus had total debt of C$6.53 billion ($4.70 billion) as of Dec. 31. The company has a market value of C$11.62 billion.

(This version of the story corrects to “may” from “to” in headline)

Reporting by Anet Josline Pinto in Bengaluru; Editing by Shounak Dasgupta

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