(File Photo: Cenovus’ Christina Lake project.)
Cenovus Energy Inc. said Wednesday that it’s on track to achieve its $500 million in budget cuts as the producer tries to remain financially competitive in light of the low price of oil.
The Calgary-based company announced a first quarter loss of $118-million or 14 cents per share, that’s a big improvement over the $668-million net loss posted over the same quarter in 2015.
“We continue to make significant structural improvements in our organization,” said Brian Ferguson, President and Chief Executive Officer. “I believe these changes will make us a cost and efficiency leader so we can drive sustainable value for our shareholders in a volatile price environment.”
Cenovus has already reduced 2016 capital spending by $300 million and says it’s on track to lower general and administrative costs by another $200 million. The company also notes that is has completed most of its 440 layoffs for 2016, bringing total staff reductions down by 31 per cent since Dec. 31, 2014.
“The cost reductions we’ve achieved to date and the company’s continued focus on increased efficiency have put us in a strong financial position,” said Ferguson. “We expect to be able to execute on our planned capital program, maintain a strong balance sheet and fund our current dividend, even with Brent crude prices in the US$40 per barrel range through the end of 2017.”
Oilsands production averaged 137,975 barrels per day in 2016, down from 144,372 bbl/d in the first quarter of 2015 a four per cent drop from year-to-year.
Christina Lake averaged production of 77,093 bbl/d in the first quarter, a one per cent increase when compared with the same period in 2015. Phase F and Foster Creek phase G expansions are now largely complete, with plant commissioning and steam circulation expected to begin over the next few months and first oil anticipated in the third quarter of this year.
Foster Creek averaged 60,882 bbl/d, ten per cent lower than 2015 as the company held tight to money and decided to delay spending on new well pads and repairs and maintenance. That maintenance work is now underway as of March.
Capital investment totalled just $323 million, a 39 per cent drop from the $529 million in 2015.
