Cenovus Energy makes $700-million cut to 2015 spending budget

Written By Unknown on Rabu, 28 Januari 2015 | 22.39

CENOVUS ENERGY AGM 20130424

Brian Ferguson, president & CEO of Cenovus Energy, says the company will lower its 2015 capital budget to between $1.8 billion and $2 billion, which is about $700 million less than the previous estimate. ( Larry MacDougal/Canadian Press)

Cenovus Energy Inc. has lowered its 2015 capital budget to between $1.8 billion and $2 billion, which is about $700 million less than the previous estimate and more than 15 per cent below last year's spending levels.

It's also looking for ways to reduce annual operating and cost reductions by between $400 million and $500 million in the years ahead and expects to redeploy and reduce its workforce in the coming weeks.

The Calgary-based oil producer and refiner says it's taking the move to preserve cash in response to further erosion in global oil prices, which have fallen below US$50 a barrel from more than $100 a barrel last summer.

The company says it plans to reassign employees to core areas in coming weeks and begin reducing the size of its contract workforce, but didn't provide details on how many people will be affected.

Cenovus says it's suspending most of its conventional drilling program in southern Alberta and Saskatchewan but will continue projects at the Christina Lake and Foster Creek oilsands operations in northern Alberta.

Cenovus chief executive Brian Ferguson says he believes crude oil prices will rebound, but the timing is uncertain.

"As a result of the dramatic slowdown across the energy sector, we expect to see continued reductions in demand for labour, service and materials.

This should create potential opportunities for us to drive improvements in our cost structure," Ferguson said in a statement.


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