February 12, 2015 / 11:54 AM / 3 years ago

UPDATE 2-Canada's Cenovus Energy to cut 800 jobs as losses deepen

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CALGARY, Alberta, Feb 12 (Reuters) - Cenovus Energy Inc , Canada’s second-largest independent oil producer, said on Thursday it will cut about 800 jobs and may slash its 2015 capital budget for a third time if oil prices continue to weaken.

The company, which reported an unexpected fourth-quarter loss, said it expects to cut about 15 percent of its workforce as it slows development of oil sands and conventional oil projects to cope with prices that have fallen by more than half since June.

Cenovus expects to spend between C$1.8 billion ($1.44 billion) and C$2 billion on capital programs this year, down from its first C$2.5 billion to C$2.7 billion estimate, which itself was a 15 percent cut from its 2014 budget. And it could continue to cut spending.

“If we were to see substantially lower prices we do have the flexibility if we chose to, to reduce capital further by up to C$500 million,” Brian Ferguson, the company’s chief executive, told investors, analysts and reporters on a conference call.

He also said Cenovus was eliminating about 800 jobs, or 15 percent of its workforce. Most of the cuts would come from contract staff associated with the projects it is delaying or deferring. The company had just under 3,600 full-time employees at the end of 2013, not including contractors.

Ferguson said Cenovus would focus on its Foster Creek and Christina Lake tar sands projects, which it co-owns with ConocoPhillips.

The company’s net loss ballooned to C$472 million, or 62 Canadian cents per share, in the fourth quarter, from C$58 million, or 8 Canadian cents per share, a year earlier.

On an operating basis, excluding most one-time items, the company reported a loss of C$590 million, or 78 Canadian cents per share, compared with a profit of C$212 million, or 28 Canadian cents per share. It had been expected to report a profit of 12 cents per share, the average analyst estimate for the measure according to Thomson Reuters I/B/E/S.

Cenovus’ cash flow more than halved to C$401 million, or 53 Canadian cents per share, while total oil production rose 14.5 percent to 216,177 barrels per day.

The company’s shares were down 1.3 percent to C$24.37 by midday on the Toronto Stock Exchange. ($1 = 1.2460 Canadian dollars) (Reporting by Scott Haggett; Editing by Tom Brown)

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