Cenovus Energy trims budget to reduce operating costs

Cenovus Energy is planning to cut capital spending next year to achieve a reduction in operating costs and improve its balance sheet.

As per the plan, the company intends to invest between C$1.5bn ($1.16bn) and C$1.7bn ($1.32bn), marking a reduction from its previous budget guidance.

The company has allocated the majority of the budget to sustain base production at its oil sands operations.

The remaining capital will be directed towards continued construction at the phase G oil sands expansion at Christina Lake and a targeted drilling programme in the Deep Basin.

Cenovus Energy president and CEO Alex Pourbaix said: “Our priorities for 2018 are to reduce costs and deleverage our 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.

“We will build on the success of our divestiture programme and work to exceed the goal, established in June of this year, of achieving C$1bn ($777m) 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 achieve average oil sands production of 373,000bbl/d next year, which represents a 26% increase over its production forecast for this year.

Cenovus will enforce additional job cuts, reducing its workforce by 15%.

During the last three months, the company reached deals to offload oil and natural gas operations, with anticipated gross proceeds of more than C$3.7bn ($2.87bn).