Cenovus plans to cut 15 per cent of workforce

Cenovus Energy Inc. said Thursday it is planning to cut about 15 per cent of its workforce as it looks to reduce costs next year.

The company (TSX:CVE) said it expects to find savings in areas such as drilling performance, development planning and optimized scheduling of oilsands well start-ups.

The cuts come as Cenvous said it plans between $1.5 billion and $1.7 billion in capital spending next year, mostly in the oilsands. That compared with its guidance for capital spending this year of $1.55 billion to $1.65 billion.

Cenovus chief executive Alex Pourbaix said the company’s priorities for 2018 are to reduce costs and deleverage its balance sheet while maintaining capital discipline.

“The sooner we can achieve our long-term debt ratio goal, the sooner we can move to balance returning cash to shareholders with disciplined investments in high-return growth,” Pourbaix said in a statement.

“We will build on the success of our divestiture program and work to exceed the goal, established in June of this year, of achieving $1 billion in cumulative capital, operating and general and administrative cost reductions with the aim of accelerating these reductions over the next two years instead of three.”

The company expects to reduce its per-barrel oil sands operating costs by eight per cent next year and per-barrel oil sands sustaining capital costs by 12 per cent compared with its 2017 forecast.

Cenovus shares have struggled since the company announced a deal in March to buy out its Houston-based oilsands partner, ConocoPhillips, for $17.7 billion.

The move was criticized by analysts who said Cenovus lacked the experience to operate ConocoPhillips’ northern Alberta and B.C. Deep Basin conventional assets included in the deal.

Since then, Cenovus has struck deals to sell four major asset packages for a total of $3.7 billion to help pay for the purchase.

It said the combined net proceeds from the asset sales will be used to fully retire the outstanding amount on its assetsale bridge facility.

Cenovus said it is also looking to sell a package of non-core assets in the Deep Basin.