Oilpatch pain persists as Cenovus to cut hundreds more jobs this year
It's another gloomy day in the oilpatch with oilsands giant Cenovus Energy Inc. announcing 300 to 400 jobs cuts in its Calgary office by year-end 2015.
Lauren Krugel, The Canadian Press
Published Thursday, July 30, 2015 12:50PM EDT
Last Updated Thursday, July 30, 2015 6:09PM EDT
CALGARY -- Cenovus Energy says 300 to 400 workers will be let go from its Calgary office by year end as hopes for a quick recovery in oil prices evaporate.
The cuts announced Thursday are on top of 800 positions Cenovus eliminated in February.
"It is always difficult when we have to let good staff members go. We take these decisions very seriously," CEO Brian Ferguson told analysts on a conference call.
"These workforce reductions are directly related to a more focused pace of work in response to the continued low price environment."
A rebound in crude prices to around US$60 a barrel in May and June proved short lived. U.S. benchmark crude settled at US$48.52 a barrel, less than half of last year's levels.
In addition to the head office jobs, Cenovus is also looking to trim its field workforce in early 2016. The company had 3,545 employees at the end of last year.
The reduction is expected to save the oil producer about $100 million annually, on top of the $280 million in cost savings it is already targeting for this year.
Cenovus (TSX:CVE) is also reducing its quarterly dividend by 40 per cent to 16 cents a share.
The company posted an 80 per cent reduction in net earnings for the second quarter to $126 million from $615 million a year earlier.
Meanwhile, global energy giant Royal Dutch Shell PLC said it expects to have cut 6,500 positions by the end of this year.
Some 700 of those cuts are in Shell's Canadian heavy oil business, affecting both staff and contractors, said Shell Canada spokesman Cameron Yost. The roughly 300 positions eliminated at Shell's oilsands mining operations earlier this year are included in that figure.
Oilsands giant Suncor Energy (TSX:SU) has reduced its head count by about 1,300 this year, chief financial officer Alister Cowan told an analyst conference call Thursday.
Suncor is paring a further $400 million from this year's budget to between $5.8 billion and $6.4 billion.
It's the second time this year Suncor has slashed its budget. In January it announced it would reduce its budget by $1 billion to between $6.2 billion and $6.8 billion.
CEO Steve Williams told analysts there's not much room for more cuts this year.
"This is not slashing and burning. One of the issues with slashing and burning capital budgets is it comes with a price later. So it's been a very measured reduction where we're still getting the maintenance on the plants we want, where we're still getting the growth projects we want fully funded," he said.
"So it's a grinding process of working these costs out through individual contract-type negotiations. So you've seen the majority of it."
Suncor netted $729 million during the second quarter, compared to $211 million a year earlier, when it booked impairment charges.
Also Thursday, Canadian Oil Sands Ltd. (TSX:COS) posted a quarterly net loss of $128 million compared to a profit of $176 million a year earlier.
The company's business is centred around its 37 per cent stake in the Syncrude oilsands mine north of Fort McMurray, Alta., making it particularly sensitive to swings in crude prices.
Refinery-ready synthetic crude produced at Syncrude fetched $74.47 a barrel during the quarter, compared to $112.04 a year earlier.