Cenovus budgets for more cost, payroll cuts

Cenovus Energy Inc. is combining executive jobs and planning a 15% workforce cut in 2018 under a little-changed budget focusing on cost and debt reduction. It plans to invest $1.5-1.7 billion (Can.) in 2018, compared with an expected $1.55-1.65 billion this year.

Cenovus Energy Inc. is combining executive jobs and planning a 15% workforce cut in 2018 under a little-changed budget focusing on cost and debt reduction.

It plans to invest $1.5-1.7 billion (Can.) in 2018, compared with an expected $1.55-1.65 billion this year.

Operational executives departing the company are Kieron McFadyen, executive vice-president and president, upstream oil and gas, and Bob Pease, president, downstream, and director, US operations, at Cenovus Energy US LLC.

Drew Zieglgansberger, executive vice-president, Deep basin, becomes executive vice-president, upstream. Keith Chiasson, who joined Cenovus in 2016 to lead oil sands production operations, is now senior vice-president, downstream.

Cenovus plans 2018 investment of $1.04-1.155 billion in the oil sands, $175-195 million in its Deep basin operations along the eastern slope of the Rocky Mountains in Alberta and British Columbia, $180-210 million in refining and marketing, and $100-120 million in corporate activities.

The company has agreed to sell its legacy conventional oil and natural gas operations for more than $3.7 billion. It expects to have invested $210-225 million in those operations this year.

In the oil sands, Cenovus expects to trim operating costs by 8% from its 2017 forecast to $7.10-8.60/bbl and sustaining capital costs by 12% to $5.50/bbl of installed capacity. It’s budgeting sustaining capital for oil sands work of $780 million.

Most of the rest of Cenovus’s oil sands investment, $270 million, targets construction of Phase G expansion at its Christina Lake thermal operation. The phase, due on stream in the first half of 2019, has design capacity of 50,000 b/d.

Cenovus forecasts its total average production from the Christina Lake and Foster Creek oil sands projects to be 370,000 b/d in 2018, 26% more than in 2017, during which it acquired full ownership of the assets from ConocoPhillips (OGJ Online, Apr. 10, 2017).

In the Deep basin, where Cenovus also acquired interests from ConocoPhillips last year, the company projects operating costs of $7.50-8.50/bbl, down 11% from 2017 expectations. It plans to spend $175-195 million in the area, drilling 15 net wells.

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