- Oil-sands producer has eliminated 700 jobs since early 2015
- Company has also frozen wages and reduced capital spending
Cenovus Energy Inc. said a workforce reduction will help lower costs this year and next as the Canadian oil producer tackles the oil-price slump.
The 700 positions that have been eliminated since earlier this year, along with other measures, will save the oil-sands producer about C$400 million ($304 million) in 2015, Cenovus said in a statement Thursday. The Calgary-based company has also frozen wages and reduced capital spending. The number of eliminated positions is about double the 300 to 400 anticipated in July.
“We’ve made difficult, but necessary decisions to help us remain financially resilient,” Chief Executive Officer Brian Ferguson said in the statement. “It’s important that the size of our workforce matches our more moderate approach to oil sands growth and our reduced cash flow in a lower commodity price environment.”
The crude market downturn has forced Cenovus, which was spun off from Encana Corp. in 2009, to cut jobs for the first time this year. The company and its competitors are squeezing spending in the oil sands, among the world’s most expensive reserves to develop. The price for West Texas Intermediate crude averaged $46.50 in the quarter, compared with $97.25 in the year-earlier period.
The job cuts mean the company will have 24 percent fewer staff at the end of the year than in 2014, Ferguson said during an earnings conference call. The company is also making changes to its policy of giving employees two Fridays off a month, he said.
The announcement came as Cenovus released third-quarter results. The company said net income rose to C$1.8 billion, or C$2.16 a share, from C$354 million, or 47 cents, a year earlier. Excluding one-time items, Cenovus reported a loss of C$28 million, or 3 cents a share, less than the 5-cent average of 14 analysts’ estimates compiled by Bloomberg.
Cenovus shares rose 4.2 percent to C$20.05 at 12:18 p.m. in Toronto.