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Oil producer Cenovus Energy Inc. (CVE.TO) posted a bigger-than-expected quarterly loss and announced a fresh round of cuts to its quarterly dividend, 2016 capital budget and work force, as it tries to shore up finances amid an incessant fall in oil prices.
The Canadian company, which has been cutting costs in response to a more than 70 per cent fall in oil prices since June 2014, said it would lower spending at its Foster Creek and Christina Lake oil sands projects in Alberta, which it operates along with ConocoPhillips. third-largest crude reserves, but are more expensive to operate in than conventional oil fields.
“Capital discipline and balance sheet strength will remain our top priorities in this extremely challenging oil price environment,” Chief Executive Brian Ferguson said in a statement on Thursday.
Cenovus cut its 2016 capital spending for the second time, this time by $200-million-$300-million to $1.2-billion-$1.3-billion, and said it also plans to reduce spending on its emerging oil sands assets and its conventional oil business.
However, the company said the planned capital spending reductions would have “minimal impact” on its oil sands production, which it expects to stay within its previous forecast of 144,000-157,000 barrels per day on a net basis.
Cenovus sold its oil and gas royalty properties to Ontario Teachers’ Pension Plan for about $3.3-billion last year to strengthen its balance sheet and create flexibility to invest in growth projects.
The company said on Thursday it plans to further reduce its work force, on top of a 24 per cent reduction last year. It did not say how many employees would be affected in the latest round of job cuts.
Cenovus, which had cut its dividend by 40 per cent in 2015, said it would slash its current-quarter dividend by 69 per cent to 5 cents per share.
The company also plans to cut operating, general and administrative costs, including for its work force, by $200-million.
Cenovus’s net loss widened to $641-million, or 77 cents per share, in the fourth quarter ended Dec. 31, from $472-million, or 62 cents per share, a year earlier.
Operating loss, which excludes most one-time items, fell by more than a quarter to $438-million, or 53 cents per share.
Analyst on average were expecting a loss of 20 cents per share, according to Thomson Reuters I/B/E/S.