WATCH: There was more grim news about Canada’s economic health Thursday. Shell announced 6,500 job cuts worldwide, including 700 jobs that were previously cut in Canada. Meantime, Suncor is eliminating 13,000 Canadian jobs this year and Cenovus is trimming another 400 positions at its Calgary head office. Any hope of a rebound is quickly fading. Reid Fiest reports.
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 the US$60 a barrel mark in May and June proved to be short lived. U.S. benchmark crude prices have been below US$50 a barrel in recent weeks, about half of what it fetched a year earlier.
In addition to the head office jobs, the oil producer is also looking to trim its workforce in the field in early 2016.
The reduction is expected to save Cenovus 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 has “stress tested” its financial strength at US$50 oil prices through 2017 and believes it can fund its new dividend and invest in its operations without harming its balance sheet.
READ MORE: Cenovus cutting 15 per cent of staff
The company posted an 80 per cent reduction in net earnings for the second quarter to $126 million from $615 million a year earlier.
WATCH: With oil prices sitting at less than US$50 a barrel, there’s some bad news from two of Alberta’s biggest energy players. Cenovus Energy and Suncor Energy are both announcing job cuts. Global’s Gord Gillies has the details.
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 have been 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) says it has reduced its headcount by about 1,300 this year.
Late Wednesday, Suncor announced it would be 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 a conference call 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. It’s possible you could see even more deflation as the year goes on, but our work program is largely fixed, contracted and in place now.”
Suncor netted $729 million during the second quarter, compared to $211 million a year earlier, which it booked impairment charges.